Women’s financial health is currently at its lowest point in at least five years, according to a new report from Ellevest. The firm introduced a new framework, the Women’s Financial Health Index, to track women’s financial health and monitor the impact of where they are going financially and the actions they are taking to improve their financial health.
“The world is better off when women have more money,” the report said, noting that closing the gender wealth gap could add $28 trillion to global gross domestic product levels. But the financial landscape for women remains uneven, with recent economic trends threatening to wipe out decades of progress.
Women face challenges in achieving savings security, which has consequences for their financial well-being throughout life, including retirement, the study says. Women retire with about two-thirds as much money as men and are 80% more likely to be poor in retirement.
Additionally, women hold nearly two-thirds of the student debt at all levels of education, owing about 16% more than men at graduation. More women are taking out loans, with balances 14% higher than men at graduation, the report said. Women also face barriers to full participation in the workforce. They are more likely to see wages drop after giving birth, and women-owned businesses took twice as long to recover from the pandemic.
While most reports that focus on women’s financial health are sporadic or one-off snapshots released by government agencies, Ellevest says its index aims to take steps to address “the lack of robust, ongoing and timely measurement of financial welfare of women.”
Index scores are calculated monthly from May 2018 through this July using 12 indicators, including female employment rate, student debt, consumer confidence index, inflation, gender pay gap, paid family leave, access to abortion, corporate leadership and venture capital funding for women. A higher score indicates conditions associated with better financial health for women, while a lower score indicates poorer financial health.
The study found that the average value of the index over the time period was 6.8. The past five years have consisted of generally positive results driven by confidence, high employment rates, improvements in gender diversity at the CEO level and in Congress, and increases in savings and impact investing.
However, in two periods – April 2020 and January 2022 – women’s financial status dropped dramatically. With shutdowns stemming from the COVID-19 pandemic, financial health bottomed out, falling rapidly between January 2020 and April 2020, the study said. Women now face further decline caused by limited access to reproductive health care after Supreme Court ruling overturned Roe v. Wade, lower consumer confidence and inflation. The July 2022 index score of 1 is the lowest in five years – down from 7.5 in May 2021 – suggesting women’s financial health is worse than it has been in the past five years .
Ellevest report, The State of Women’s Financial Well-Being in 2022,,” which includes data from the index, found that money-related stress dominates women’s lives. Fifty-nine percent of women worry about money more than once a week, and 43% actively worry about money at least once a day. In both cases, women are more anxious than men (55% and 36%, respectively).
Older women (Gen X and Baby Boomers) are more likely to worry about inflation (91%), a possible recession (81%) and the need to cut back on spending (76%), the survey said. Younger women (millennials and Gen Z) are more likely to worry about reproductive rights (63%), job security (62%), representation in government (54%), housing prices (51%) and costs for childcare (42%) .
Climate change is also a major financial concern for 62% of women. Its impact will disproportionately affect the world’s more vulnerable population groups, including women and girls, the study said. More women rank it as a top financial concern than retirement planning (51%), credit card debt (46%), the stock market (38%) and childcare costs (30%).
In 2021, women ranked financial well-being (14%) as the least important form of well-being, less important than physical, emotional and spiritual well-being, the survey said. This year, women were three times more likely (42%) to consider financial health critical.
Only 36 percent of women are currently investing, while 63 percent of men are, the survey said. The main priority for men is their retirement, while women are more focused on their family. Only 31% of women have met with a financial advisor before, compared to 59% of men.
Despite economic uncertainty, 75 percent of women investing for retirement have not stopped their contributions, and 63 percent have reduced their day-to-day spending, the report said. Only 38 percent of women reported feeling concerned about market volatility, compared to 58 percent of men — which may explain why women haven’t changed their investment habits, the study added.
This research was conducted by Censuswide on behalf of Ellevest between August 5 and August 15 among more than 2,000 adults over 18 in the US