Personal Finance

93% of women are stressed about money. Building a cash reserve can help, experts say


Equal Pay Day: Gender wage gap barely budges from 2002 to 2022

There’s a wealth gap between women and men that has been stubbornly hard to shake.

Gender pay gaps have persisted despite women’s increasing levels of education and representation in senior leadership positions at work. Women are still more likely to take time out of the labor force or reduce the number of hours worked because of caretaking responsibilities, often referred to as the “motherhood penalty.” 

That contributes to a growing wealth discrepancy, which is difficult to escape, according to Stacy Francis, a certified financial planner and president and CEO of Francis Financial in New York.

More from Women and Wealth:

Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

Largely as a result of the wealth gap, women tend to be more financially vulnerable than their male counterparts. Regardless of their household income, 93% of women feel stress when it comes to money, according to a new report by Fidelity Investments.

Other reports show that many American women stay in marriages that are unhealthy and even border on dysfunctional due to financial insecurity.

Even in the healthiest relationships, women are likely to outlive men, Francis says, which is why she advises her female clients to consider that at some point, “They are going to be on their own.”

“Most all of us are going to be in the driver’s seat of our finances alone in the car at some point,” said Francis, who is also a member of the CNBC Financial Advisor Council.

While the benefits of saving are clear, for women, the ability to be independent is particularly powerful.

The benefit of a ‘f— off’ fund

In a viral 2016 Billfold piece, writer Paulette Perhach outlined the security that even a small cash reserve can provide. She recommended building up some savings that could be tapped even in a nonemergency and coined it a “f— off fund.”

“Whether the system protects you or fails you, you will be able to take care of yourself,” Perhach told CNBC. “It’s about creating options.”

In fact, financial stress levels drastically decrease with each additional month of emergency savings set aside, according to Fidelity. Roughly 81% of women with no emergency savings felt a fair amount or a lot of stress. Once women have three months’ worth of emergency savings, only 26% report high stress levels, Fidelity found.

How to build a cash reserve

Once an emergency fund is off the ground, most experts recommend meeting with a financial advisor to shore up a long-term strategy. Many employer-sponsored plans now offer counseling or one-on-one coaching. There’s also free help available through the National Foundation for Credit Counseling.   

“One of the things that I talk to my clients about is the importance of establishing a personal financial plan,” said Judith Lee, senior vice president and wealth management advisor at Merrill Lynch. “Having a plan gives them a road map in terms of where they are right now and their individual goals.”

Ultimately, that money road map is key to feeling empowered, she added. “The specific choices one makes about savings and spending has an impact,” Lee said. “The discipline it takes to save is an acknowledgement to ourselves that we are worth the sacrifice.”

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