Women are Bearing the Brunt of the Cost of Living Crisis - And it's Impacting their Savings Too
We asked a policy expert and two women navigating the crisis to weigh in
It’s been a turbulent few years for many of us financially. From the impact of the pandemic to the cost of living crisis, we’re all thinking more carefully about where our money goes and how far it stretches. For women, and financial inequality more generally, the picture isn’t particularly rosy.
So let’s break it down.
Women, the pandemic and the cost of living crisis
According to the UN, Covid-19 has intensified levels of widespread, pre-existing gender inequalities, placing women at even greater risk of economic insecurity. Women are more likely to have lost employment or dropped out of education as a result of the pandemic, and have taken on an increase in unpaid domestic and care burdens.
Fast forward to today, and women are grappling with the disproportionate effects of the cost of living crisis too. While many people globally are struggling with increased living costs, women are bearing the brunt of the cost of living crisis due to the disadvantaged position we already occupy within the economy. The World Economic Forum reported that, at the current rate of progress, closing the today's gender economic gap will take 169 years.
Why are women falling behind?
Prevailing gender roles mean women tend to be responsible for household budgeting, particularly when income is scarce. “This means the stress and mental load of making ends meet when incomes are not keeping up with price rises mainly falls on women,” explained Dr Sara Reis, Deputy Director and Head of Research and Policy for the Women’s Budget Group. “Women also tend to work as what we call the ‘shock absorbers’ of poverty in their families, going without essentials like food, heating or clothing to ensure their children don’t miss out on those.”
In times like this, many of us will fall back on our savings to help us through. But what impact has the cost of living crisis had on women’s savings?
The gender savings gap already existed
Unfortunately, there is also a gender savings gap as a result of the wider gender pay gap and women being more likely to incur the costs of raising children. “Women tend to have less savings and levels of wealth than men, so they have less of a cushion to fall back on when the cost of essentials rises,” says Dr Reis. For example, women in the UK manage to save a third less than their male colleagues. “Having lower savings means having a thinner financial safety net to face life’s risk, like a relationship breakdown, a job loss, or a cost of living crisis.”
"My savings are now for actual tangible emergencies"
How women are navigating the cost of living crisis
So with women earning less than their male counterparts, it’s no surprise that we are having to rethink our spending strategies. New mother and Communications Manager, Sapna, explained that the cost of living crisis means she now keeps a much closer eye on finances and has made sacrifices where necessary. “While on maternity leave, I am very conscious of how much I’m spending every day,” she said. “My husband and I budget a lot more than we used to and have created new systems for tracking all our spending to see where we can cut back.”
She added: “The maternity period in general can be very isolating for new mothers who often try to combat this by doing activities or going to classes with other new mums, but I often feel like I can’t be spending money on things like that.” Instead, the crisis has prompted Sapna to save as much as she can. “I definitely now try to put a lot more money away for a ‘rainy day’, but that has come at the cost of doing a lot less with my time.”
For first time homeowner Shola, buying her first property and the current crisis have changed the way she thinks about savings. “I’m no longer saving for a distant hypothetical ‘rainy day’ or exciting things like a house deposit. My savings are now for actual tangible emergencies, such as if I suddenly lose my job, now that I have a mortgage to pay and am no longer reliant on a landlord to maintain my home.”
Simultaneously, Shola has started to treat herself a little more where she can. “I think the end of the pandemic has inspired me to make sure I’m enjoying my life to my fullest ability. While I ensure to add to my emergency pot, I don’t want to hoard all my savings and not enjoy life where I can,” she said. “It’s hard to find the balance between enjoying life and being responsible.”
The increased importance of financial literacy
For both women, the current crisis has led them to look at their income and outgoings more closely than ever and to increase their financial knowledge generally. “I’ve always tried to do my own research in terms of savings and increasing my financial literacy,” explained Shola. “But since the cost of living crisis, I try to ensure I’m more aware than ever of what options are out there in terms of savings schemes and how to make the most out of whatever savings I have.”
Sapna agrees and has been researching and investing money in new platforms. “I’m usually very risk averse but at the moment, it feels like I need to take more risks,” she explained. “My money used to just sit in my usual bank accounts, but I now feel like I need to be smarter. I’ve started doing more in-depth research and moving money around to banks with better interest rates.”
The good news is that despite the stock market being male-dominated, women make better investors with their portfolios more likely to outperform men's. Aside from the gender pay gap, a crucial factor that has held women back in this area for so long is the lack of inclusive financial education. Research shows that women simply lack the confidence needed to start investing. But with improved access to financial education, this could empower more women to get started.
Womens' financial futures
The gender savings gap, exacerbated by the cost of living crisis, is not only affecting women’s day-to-day but their futures and freedom too. For example, the gender pension gap across the EU is over 27%. This means that women aged over 65 receive a pension that is, on average, over a quarter lower than men’s.
“I’m glad I’m thinking about finances a bit more,” said Sapna. “But I can’t help but wonder what the future holds for my daughter and whether she’ll have the same opportunities as I did, for example going to university.” Dr Reis explained that “[The gender savings gap] hinders women’s ability to take risks. Taking time off to retrain or upskill into a better job becomes harder when you don’t have savings.”
It’s not looking good for women
Let’s be frank here: the pandemic and cost of living crisis have set back our progress towards gender equality considerably — and it comes as no surprise. While women have been disproportionately pushed into precarious economic circumstances, the gender savings gap means that they have less of a financial buffer to support them through the crisis, further compounding the systemic inequalities between men and women. Women’s financial freedom is becoming increasingly restricted as the financial landscape gets worse.
“Women’s financial autonomy is compromised, their capacity to make choices in terms of where and with whom to live with, which careers to go for, relocating for a new job opportunity. All of these things are harder if less or no money is available.” said Dr Reis. Not only is this bad news for women, but it’s bad for the economy generally: “This means that women’s full potential is untapped, and the wider economy loses these benefits.”
Financial education is more important than ever
As the cost of living crisis continues, financial education has never been so important. As individuals it’s easy to feel powerless when looking at the global crisis, instead we must focus on what is within our control and the actions we can take to improve our own personal financial health. Improving our financial literacy will empower us to make the most out of our personal finances and investments, and equip us with important tools for navigating the current crisis and future-proofing our finances.
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