You’ve heard of the gender pay gap. Women overall make 84 cents to a man’s dollar. It’s a common stat (with over 200 million search results on Google), and for good reason. It’s a big problem. But actually … it’s only part of the problem.

The lesser-known gender gap (with 56.4 million hits on Google) is the gender wealth gap. Not how much women make compared to men, but how much they own and keep. How much they have: the value of assets, including cash, investments, and real estate, minus debts. And it’s way bigger — and a way bigger deal — than the gender pay gap.

How big is the gender wealth gap?

The most commonly referenced reports say that for every dollar a white man owns, women overall own just 32 cents. Black and Latina women? Just one penny.

That said, it’s hard to pin down exactly how big the gender wealth gap is for a couple of reasons. First, a person’s wealth changes over their lifetime, so age can skew the results. For example, a 22-year-old with student loans probably has a lot less wealth than a retired surviving spouse who owns a home. Plus, most wealth data is collected at the household level rather than an individual level, meaning a lot of women’s wealth data is typically mixed in with a male partner. (One analysis from 2021 that tried to look at the gender wealth gap at a household level found that women’s median household wealth was 55 cents to every dollar of a man’s median household wealth.) 

Not even the history-making Great Wealth Transfer, which will see mostly women inheriting an unprecedented amount of money over the next few decades, will close the gender wealth gap. 

No matter what angle you come from, one thing’s for sure: The gender wealth gap is massive.

Why is the gender wealth gap so big?

Because financial inequality hits women’s wallets in so many different ways.

• The gender pay gap. Women are paid less than men. They’re promoted less often than men. They’re denied raises more often than men. And they stop getting raises a full decade earlier than men.

• Women spend less time in the workforce. And often not by choice. 95% of low-wage workers, most of whom are people of color, don’t get paid leave, which makes it nearly impossible to keep a job if they have children, sick family members, an injury, etc. But even for higher earners, traditional gender roles (or the fact that most women bring in a smaller portion of the household income) mean women are the ones to stay at home if need be. While the flexible work model is helping more high-earning women stay in the workforce longer (or reduce their hours less), the fact remains overall: Less time in the workforce means fewer years earning and building wealth.

• The gender investing gap. Women keep the majority of their money in the bank, while men invest the majority of theirs. That means women are missing out on the opportunity to earn the kind of returns that investing has historically produced (specifically, the stock market, which has gone up at an average of ~10% a year since 1928). So, women could be missing out on hundreds of thousands — or millions — over a lifetime.

• The financial industry is dominated by men. One reason women invest less than men? The industry just wasn’t built for them. 72% of financial advisors are men. Only 1.4% of US assets were managed by investment managers owned by women and / or people of color. It’s a world that has a reputation for silencing women and rewarding aggressive masculinity — see Reddit memestocks, The Wolf of Wall Street, and how could we forget the Charging Bull?

• Less women work with a financial advisor than men. It’s not a surprising stat considering the above — and that 0% of women disagreed with the statement that “the financial industry was not made with women in mind.” Yet, it’s a big blocker to building wealth. People with a financial plan have about 2.7x the net worth of those who don’t. Plus, our own research shows that the money confidence gap between men and women shrank if a woman was working with a financial advisor.

• The gender debt gap. Women have more student loan debt. They pay half a percent more on credit cards, even controlling for other factors. And they pay higher rates on small business and personal loans, and on mortgages. Women see lower returns in real estate investments, too.

• The pink tax. Women pay more for a ton of things, from razors to clothing (even kids’ clothes) to girls’ toys to senior care. By one estimate, the pink tax costs women $1,300 a year.

• Women spend more on their families. And women spend more of their time performing free labor. In the US, women perform an average of four hours of unpaid work per day (compared to men’s two and a half hours). And by one New York Times estimate, the unpaid labor performed by American women in 2019 would have been worth an estimated $1.5 trillion (!!) if they’d been paid minimum wage for that work. As sociologist Jessica Calarco puts it, “Other countries have social safety nets. The US has women.” Additionally, women make up to 83% of the household purchasing decisions, yet more men than women are likely to make decisions about saving and investing.

Why is the gender wealth gap more important than the gender pay gap?

Because of all the stuff above. Wealth is the more holistic measure of inequality because it takes into account things like investments, emergency savings, debt, inheritances, etc — all of which are huge contributors to a person’s long-term financial stability and power.

The gender wealth gap is also a stronger indicator of future inequality. It takes money to make money, as they say. And it’s expensive to be poor. The gender wealth gap acknowledges that financial equality isn’t just about the money you have now. It’s also about your capacity for making things better for your family in the long run — ‌how you’re able to save and create stability for future generations.

Plus, even if the gender pay gap disappeared, women would still be at a serious economic disadvantage thanks to centuries of legal oppression, especially for Black and Native American women, and modern-day inequities that all affect who gets to build wealth and how.

How to close the gender wealth gap

Like racial injustice, climate change, and world hunger, the gender wealth gap is a systemic issue, and it will require systemic answers. Individual action can only go so far. But of course, we can still do what we can in our own lives to close it.

• Use the financial power you have. Spend intentionally. Model equity at home. Buy from women-led businesses and use women-run services. Fund women entrepreneurs. Donate to political campaigns and causes that support women. Avoid banking with institutions involved in predatory lending practices. Raise kids to use money for good. Meet with a financial planner who gets you. Invest for positive impact. Invest (data that shows women investors outperform their male counterparts). 

• Unlearn myths about women and wealth. We didn’t just coin the phrase “nothing bad happens when women have more money” out of thin air. But it might seem like it, given the harmful messaging our society pushes about women and wealth. True gender wealth equality has been demonstrated to lead to better economic growth. Companies with more women in board, executive, and senior management roles routinely outperform companies without gender (and other) diversity. Women also tend to reinvest a lot more of their income into their families and communities. And when women do invest in the market, they invest in businesses and causes that are better for the world (which also happen to be better for bottom lines). Ultimately, a future without a gender wealth gap makes the world better for everyone.

Make your wealth work smarter. Book a complimentary 15-minute call with a financial planner on Ellevest’s all-women team, and take the first steps to make the most of your life and legacy.

Disclosures