7 Truths About Women and Money

By Sallie Krawcheck

Last week, I wrote about the six money lies told to (and about) women. They’re a mess. And they mess us up. To counter those lies and shift the focus back, this week I offer you seven truths about women and money:

1. It’s not your fault: “Other countries have social safety nets. The US has women.”

If this wasn’t clear before, the pandemic drove it home. The US has no mandated paid parental leave, no universal low-cost child care, no mandatory sick leave. As sociologist Jessica Calarco put it, mothers are our safety net.

No number of self-help books can help overcome this. It’s not a personal issue; it’s a structural one in a society that pays men more. Even before gender expectations around who does the caregiving enter the picture: If someone needs to quit to take care of the kids, it’s usually the one who’s earning less money for the family.

2. “Todd” is never going to promote you, and that’s not your fault, either.

Your boss may be a nice guy. Seems supportive in your meetings. And he probably went to unconscious bias training two weeks ago. And maybe he drops by for a drink at the company’s women’s group. But no matter what he says, this is the truth: If despite your great work, he hasn’t promoted you in three years but has promoted Andrew and Josh and Karl and Chris, he’s never going to promote you.

3. There’s strength in numbers.

A few thoughts on this one: First of all, there is no natural limit on the number of women who can be successful: The economy can grow, companies can grow, more companies can be founded. So there’s not a natural ceiling that we hit up against. And a broader, stronger economy is a good thing.

Secondly, women have been socialized to play business as an individual sport — reading career self-help books and checking off the steps, avoiding mixing business with friendships. But men have historically played it as a team sport — promoting each other, talking each other up, coaching each other, sending business to each other, serving as references to each other. You get the picture. That’s why they call it the “boys’ club.”

4. The pay gap matters; the wealth gap matters even more.

Google “gender pay gap” and you get 8.5 million citations. You’ll learn that the gender pay gap is how much women earn in comparison to men: It was 82 cents pre-pandemic on average, and 61 cents for Black women. Important stuff. You’ve probably heard of it and read about it.

Contrast that to the “gender wealth gap.” It’s the overlooked stepsister, coming in at just 19,700 citations if you Google it. Which is a shame because it’s arguably even more important: the gender wealth gap is how much money women have and keep in comparison to men. It’s only 32 cents on average, and just a single penny for Black and brown women. While we were making progress on the gender pay gap pre-pandemic, the gender wealth gap was going backward. And has no doubt gotten much worse because of the pandemic.

5. Compounding is queen.

There are a number of reasons that the gender wealth gap is wider than the gender pay gap: the aforementioned pink tax, less time in the workforce, that women tend to spend more on their children than men do.

But there’s also the impact of compounding, which Albert Einstein is reputed to have called the eighth wonder of the world. In investing, you can earn a return on your original investment, and over time, also on the prior returns. The dollar amount of the growth can pick up over time, as you earn returns on earlier returns. And then returns on the returns on the returns.

How powerful is it? If you had invested $1,000 in 1900 and left it there, and allowed it to compound, in 2020 — even with the pandemic and all of the negative events of the past 120 years — that $1,000 would have been worth … drum roll … $58,191,000.*

No wonder people talk about wealth begetting wealth.

Compounding works in the opposite direction for things like credit card debt, where if you pay just the minimum interest due, your interest owed can balloon to well more than the size of the original loan.

Women have been hurt by compounding both ways. They have had more debt than men, particularly more high-interest-rate credit card debt. And they’ve invested less, both in the stock market and in real estate. Thus a wedge has opened up between the gender pay gap and the gender wealth gap.

6. Women won’t be fully equal with men until we are financially equal with men.

The old saying is that “money is power.” There’s some real truth in that.

7. Nothing bad happens when women have more money.

Nothing. Literally nothing.

Women are definitely better off with more money. In fact, even just taking action on money — even small moves like saving more or beginning to invest — are the #1 drivers of confidence in their future for women.

The impact also cascades: Women’s families are better off, the economy is better off, non-profits are better off.

You know who else is better off, too? Men.

Sallie Krawcheck Signature

Source: Credit Suisse Global Investment Returns Yearbook 2020, their calculation. PDF download: Figure 12:

© 2021 Ellevest, Inc. All Rights Reserved.

*Source: Credit Suisse Global Investment Returns Yearbook 2020, their calculation. PDF download: Figure 12:

Information was obtained from third-party sources, which we believe to be reliable but not guaranteed for accuracy or completeness.

All opinions and views expressed by Ellevest are current as of the date of this writing, for informational purposes only, and do not constitute or imply an endorsement of any third party’s products or services.

The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities, and should not be considered specific legal, investment, or tax advice.

The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person.

Investing entails risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.

Banking products and services are provided by Coastal Community Bank (“Coastal”), Member FDIC, pursuant to license by Mastercard International. Your Ellevest Save and Ellevest Spend Account deposits will be insured to the regulatory limits by the FDIC through Coastal Community Bank, Member FDIC.

Funds held in your Ellevest investment accounts are not FDIC insured, not guaranteed by Coastal, and may lose value. Ellevest does not guarantee investment performance.

Ellevest Membership fees are as follows: Ellevest Essential is $1 per month, Ellevest Plus is $5 per month, and Ellevest Executive is $9. Other fees as described in Ellevest’s Wrap Fee Program Brochure and the Ellevest Membership Terms and Conditions Agreement will continue to apply.

A newsletter you’ll love

Get all the news, advice, and must-know info on women, money, and career.

Sallie Krawcheck

Sallie Krawcheck is the Founder & CEO of Ellevest.