Women and Finances

June 12, 2024

When it comes to money matters, women face different financial challenges than men which contribute to complicating the ability to earn and save. Building financial literacy is increasingly important. Without an understanding of financial concepts like inflation, interest rates and general market conditions managing finances becomes even more challenging.

Earning Power and Saving

Recent reports from Statistics Canada show that women, working full-time and part-time, on average earn eighty-nine cents for every dollar earned by their male counterparts. Wage disparity not only means having less disposable income to cover living expenses but also reduces the amount of money available for saving, especially long-term savings for retirement.

Another factor affecting earning power is that women tend to leave the workforce for periods of time and for various reasons. Having children is one of the reasons and is a significant life altering event. For those who qualify, the Government of Canada provides Employment Insurance (EI) maternity and parental benefits, if away from work because of pregnancy or recent childbirth and to parents caring for their newborn or newly adopted child. Applications for EI must be processed before the benefit payout amount and length of time you can expect to receive EI is confirmed. Generally, the basic rate for calculating EI benefits is 55% of average insurable weekly earnings, up to a maximum amount. As of January 1, 2024, the maximum benefit amount that can be received is $668 per week.

It is important to note that the Government of Canada has a ‘child-rearing provision’ which can protect the value of your CPP benefits during the period of low or no earnings.

Women also tend to shoulder the caretaking responsibilities of aging family members. During times of family caregiving, women can experience lost wages, reduced advancement opportunities, loss of benefits or job loss. Reduced or lost income decreases the amount of earned RRSP contribution room along with lower contributions into Canada Pension Plan (CPP) and employer pension plans. When women do return to work, they may settle for lower paying jobs or a decrease in work hours to help provide the flexibility required to deal with additional household responsibilities including childcare needs and assisting extended family.

Life Expectancy

Canadian women tend to live four to five years longer than Canadian men. Although these additional years mean more time spent with family and loved ones, they also present important financial considerations. A longer life span will require extra savings for day-to-day living and may also mean additional costs related to assisted living and other professional services. These factors may contribute to women’s increased concerns about outliving their savings.

Some Tips for Women’s Financial Wellness

There are many strategies women can develop and put into action for their financial security.

Workforce wellness ideas:

• Research the market salary for your job/role and experience level.
• Know your worth and advocate for job advancement and pay equity.
• Document your achievements, responsibilities, and results to show how they align with your company’s goals during salary discussions.
• Fully understand your employment benefits related to maternity and parental leave including any top up to government benefits.
• Seek out an employer that promotes work-life balance. Some options like working remotely, flexible hours or job sharing may help manage caregiving needs.

Future-focused financial strategies:

• Start early to plan for financial success through all life stages and into retirement, include strategies that account for possible long life expectancy and periods of reduced income due to caregiving.
• Take charge of your finances, do not delegate this to others like your spouse or adult children.
• Focus on building financial literacy to have a good understanding of all financial components including investments, debt management, insurance options (disability and life), taxation and estate planning.
• Use trusted financial tools and apps to help track expenses and savings.
• Find the right advisor to support and encourage you in developing and keeping to your investing plan of action.

The way we think about and treat our earned money may be influenced by inherited attitudes, individual personality traits and various life experiences. Support from trusted financial professionals can help with developing financial plans and setting goals for success. Community groups, professional networks and mentors can be sources of ideas about strategies to help with balancing career development and caregiving responsibilities.

FirstOntario Credit Union in partnership with Aviso Wealth has an experienced team of advisors specializing in various areas of wealth management including retirement planning, investment management, estate and succession planning, individual financial risk management and more. These professionals are here to help you plan for the future and reach your financial goals. Visit FirstOntario.com/Investments or call 1-800-616-8878 ext. 1700 to connect with a FirstOntario advisor and start growing your wealth today – your way.

Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc. The information contained in this report was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This should be considered as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds. The views expressed are those of the writer and not necessarily those of Aviso Wealth.