Why Women Need to Talk About Finances

In case you missed it, the recent announcement on CareShield Life premiums (Singapore's latest compulsory disability insurance plan) showed that women will have to pay higher premiums than men, on account of having longer lifespans on average.

This drew criticism that women are still often the primary (and unpaid) caregivers of the sick and elderly, and thus should be granted the same generosity when it comes to their own healthcare. The criticisms also focused on the continuing financial disparity between men and women, which makes such higher premiums a much greater financial burden on women than on men.

Despite pushes towards gender equality, the unfortunate fact is that women still lag behind men in the corporate world in terms of salary and appointments. Singapore is no exception, even though the problem is less severe here than in other parts of the world.This is significantly detrimental to the overall state of women's finances.

Lower wages lead to lost compounding – According to the Ministry of Manpower, the median salary of full-time female workers is roughly 87% that of their male counterparts. Recent surveys show that there has been little improvement over the past decade.

That means that a woman who saves the same percentage of her income as a man in a similar position will be saving a smaller dollar amount. These reduced savings can diminish the benefits of compounding and lead to a much lower portfolio value over the long term.

Fewer Years in the Workforce – Women are far more likely to stop working to care for their children. They also retire earlier than men. This means that women end up spending fewer years in the workforce on average. Fewer years earning a lower income – coupled with less opportunity for potential wage growth – means lower overall savings.

Living Longer = Higher Expenses in Retirement – It is a well known statistic that women live longer than men, and as a result will need to fund a longer and more expensive retirement. Most people would like to live longer, fruitful lives, so it is imperative that expenses need to be planned to cater for these years. In general, healthcare also gets increasingly expensive as one gets older, which is another cost that needs to be factored in.

Until society changes enough to rectify these imbalances, all this means that women need to save more in order to meet their financial goals. Women will also need to take additional measures to ensure that they will be financially secure in retirement.

This includes greater financial prudence, and an approach to investing that is intelligent and based on sound financial principles, rather than reckless speculation – which male investors in particular are prone to losing large amounts of money from. Make the most out of the power of compounding by starting early and saving regularly.

Don't shy away from talking about finances and do not let your lack of knowledge deter you. Seek out a financial adviser whom you can trust and who can translate confusing financial jargon into plain English.

For any investment solution recommended, keep asking questions until you fully understand what you are getting yourself into (regardless of how silly you may think your questions sound). Take notes if necessary so that you can remind yourself again in future when your memories have faded.

Set up periodic meetings with your adviser to keep track of your financial plans and investments as well as to get updated on changes (like the new CareShield Life) that would impact your future finances.

That way, you get to keep on top of your financial matters and need not unnecessarily fear the future!