The costs of being a woman: Why women end up with less money

The (not so) secret costs of being a woman: Earning, saving, investing

Illustration by Christine Mi

From the careers they pursue to the haircuts they get, women pay a premium compared to men throughout their financial lives. To make matters worse, society’s expectations for women, such as raising kids and caring for older parents, deal a major blow to their relative lifetime earning power. And while many women have broken through stereotypes to change the way we think about gender and money, barriers remain.

This four-part series looks at the costs of womanhood—many of which may surprise you (or make you steam). Share them with young women and girls you know. It’s time to give the next generation the tools and know-how they need to make the most of their money.

Personal finance basics that we should take for granted—earning, saving, investing—often come with an added burden for women. Here’s how expectations specific to women, such as raising kids and caring for aging parents, take a financial toll.

Pay gap

Women tend to make less money than men for many reasons, including discrimination in pay, recruiting, and promotion decisions, and women’s tendency to draw the long straw when it comes to caring for children and other family members. (Women spend an average of nine fewer years in the workforce than men.) The upshot: Typically, women make only 80.5 cents for every dollar a man earns. For younger, millennial women, the gap is smaller, but still real (about 90 cents to a man’s dollar.)

And don’t believe what you’ve read: Women don’t earn less because they work in lower-paying fields; even women who earn doctorates make just 75% of what their male colleagues do.

Mommy penalty

Research shows that mothers face a 4% decrease in earnings for each kid. And get ready to get mad: There’s actually a “Daddy bonus.” Fatherhood tends to increase men’s earnings by more than 6%. Federal law requires large companies to provide 12 weeks of unpaid leave to new mothers; the vast majority of U.S. workers don’t have access to paid leave.


Women say they have less experience in investing than men. It starts in childhood: While a recent survey showed a slight increase in parents who share their financial know-how with their sons and daughters equally, the overarching trend has been that boys are getting more money talk than girls. When they do invest, women are generally more conservative and risk-averse, keeping more of their savings in cash or in money market funds. That means potentially missing out on higher earnings from stocks, mutual funds, and ETFs. On the flipside, women tend to earn better returns than men because, rather than trying to outsmart the market, they trade infrequently and stay the course.


To end up with as much retirement savings as a man, a woman must save nearly twice as much of her earnings during her working life. Why? She’ll likely spend fewer years in the workforce (the parenting penalty), make less money when she is working (the gender pay gap), and be more cautious when she invests, potentially lowering her returns. Yet women’s life expectancy is greater than men’s, so their savings must stretch over a longer period of time. That’s a financial double whammy.

Check out the rest of this four-part series on what it costs women to stay healthy, take on debt, or spend money.

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