Is it true that women are poised to close the wealth gap? Recent research would make it easy to conclude that women are finally reaching income parity with their male counterparts. A recent Time Magazine cover story, "The Richer Sex," was devoted to espousing the economic strides that women have and will make in the next decade. As someone who has devoted their entire career and now livelihood to closing the wealth gap for women and minorities, I would say that there is some truth in the numbers, but the devil is in the details. And what is really unfortunate is that the headlines could give women a false sense of security when what they truly need is to make wealth building their number one priority. Higher incomes for women does not equate with greater wealth outcomes, and that is the real conversation we need to have. Women need to understand the difference between wealth and income.
In her groundbreaking book, Why Women Have Less Wealth and What We Can Do About It, Dr. Mariko Chang focused her attention on wealth rather than income, "The gender revolution has stalled, and the ways it has stalled are reflected in the wealth gap. The reality is women make 78% of what men make but they only own 36% of the wealth." Women's incomes may be rising, but we are still wealth poor.
In my opinion, if we are going to gain true economic parity with our male counterparts, women need to focus on these three areas.
• Stop saying, "I don't do numbers." For some reason when it comes to charts or financial analysis, women often cite a lack of confidence in this area. The reality is most women are CFO's of their households and are responsible for bill paying and budgeting. These same skill sets are easily transferrable to researching financial statements, organizational budgeting and forecasting. This is the aptitude needed to assess the future economic viability of an investment opportunity.
• Take on more risk. Far too many women take the safest option when it comes time to choose an investment or retirement program.
A 2013 study by MassMutual Investments found men had 38.25 percent more because they had a higher percentage of their savings in stocks. Stock investments outperform fixed income investments over the long term.
• Make financial acumen a priority. The top performing Value Line Investment Club Award for 2013 were given to clubs headed by women this year. Women have attributes that are wired for investing because they will do the research and stay the course for the long term.
If women take their increased earning power and make their financial security a priority, we will achieve the same type of success we have in closing the income gap.
Deborah Owens will participate as a panel member on The Changing Role of Women in the American Economy at the University System of Maryland Women's Forum Conference.