Love and the Gender Wealth Gap: Fostering financial independence in our intimate relationships

Love is often hailed as a beautiful and powerful force that shapes our lives. In the context of relationships, love can bring immense joy and fulfilment. However, when it comes to the gender wealth gap, love can be a double-edged sword for women. The love of a partner, children, and family can inadvertently undermine a woman’s financial security due to disrupted careers and compromised earnings, leaving her particularly vulnerable in the event of a relationship breakdown. In this article, we will explore why women find themselves on the wrong side of the gender wealth gap and how they can maintain financial independence within their relationships to ensure their financial security, regardless of what happens in life.

While strides have been made towards gender equality in many aspects of society, wealth disparity between men and women remains a persistent issue, largely driven by the gender wage gap, the burden of unpaid domestic and caring labour, career disruptions, and compromised earning potential. According to the Australian Bureau of Statistics (ABS), as of 2021, women in Australia still earn approximately 13.4% less than men on average for full-time work. This wage disparity not only affects women's current income but also impacts their ability to accumulate long-term wealth and financial security. Another contributing factor is the unequal distribution of caring responsibilities. Women regularly shoulder a disproportionate share of caregiving duties, including raising children and providing support to elderly family members. According to the Workplace Gender Equality Agency (WGEA), in 2020, women in Australia spent, on average, 64% more time than men on unpaid domestic and care work. The combination of these responsibilities frequently results in career interruptions, reduced working hours, limited opportunities for career advancement, and reduced earnings for women over their lifetime, ultimately resulting in a large wealth gap between men and women.

Let's bring these factors to life with an example. Consider a married couple where the woman and man both earn median wages, accounting for the gender wage gap. He earns $99,169.20 per year, and she earns $85,987.20 per year. While he continues to work full-time at median wages continuously until retirement age, she experiences three key work interruptions:

*In her 20s or 30s, she takes eight years out of the workforce to care for two children.

*In her late 40s or 50s, she stops working for four years while she is caring for a parent.

*In her early 60s, she retires two years earlier than planned to care for her spouse. 

The result of the accumulated lifelong pay gap and workforce interruptions? When she reaches retirement age, she’ll have earned a cumulative $1,731,000 less than her husband, who has stayed continuously in the workforce. 

In the event that relationships falter, which they very often do, the consequences can be particularly detrimental for women due to their financial dependence. Divorce rates in Australia remain significant, with approximately one in three marriages ending in divorce. Research from the Australian Institute of Family Studies (AIFS) indicates that divorce or separation can lead to a further decline in women's income, placing them at a higher risk of poverty and financial instability. Research from the Australian Human Rights Commission revealed that the fastest-growing cohort of people experiencing homelessness is single women over the age of 55. Put bluntly, women pay a very real financial penalty for love and care when a relationship fails.

While the reality of the gender wealth gap is grim, there is an antidote, and that’s the practice of maintaining financial independence. Firstly, it grants women the freedom to make personal financial decisions, fostering a sense of empowerment and self-esteem. By having control over their own finances, women gain a stronger voice in shaping their lives and can pursue their aspirations with confidence. Secondly, financial independence provides a crucial layer of security and resilience. It serves as a protective shield against economic uncertainties and the potential fallout of relationship breakdowns. Women who have their own financial resources are better equipped to weather unforeseen circumstances. Finally, maintaining financial independence promotes equality and autonomy within relationships. It helps balance power dynamics by ensuring that both partners have an equal say in financial matters, leading to a more equitable and harmonious partnership.

Financial independence is crucial for women in intimate relationships as it provides empowerment, security, and a sense of autonomy. Whether you're single, in a committed partnership, or navigating the aftermath of a partner's death or separation, here are some essential steps to maintain your financial independence at each stage:

Before You Partner:

1. Build a strong financial foundation: Prioritise your education, career development, earning potential, and establish your savings. The more financial resources you have, the greater your independence within a relationship.
2. Nurture your financial education: Educate yourself about personal finance, budgeting, and investing. Seek financial advice early and establish a strong network of support.
3. Start planning for career disruptions: Breaks in work and earning can derail your retirement savings and ability to build wealth. Consider making additional contributions to super and actively investing early while you have fewer financial responsibilities.

In a Relationship:

4. Maintain some financial separation: Consider maintaining separate bank accounts alongside joint accounts. Get paid into a personal account that only you have control over. This allows you to maintain financial autonomy and a degree of independence while still managing shared expenses and goals effectively.
5. Open communication: Have open and honest conversations about finances with your partner. Discuss your individual financial goals, beliefs, and expectations to ensure mutual understanding.
6. Be an active financial participant: Engage in financial discussions and decisions, ensuring you have a say in managing your shared finances. This includes budgeting, investing, and planning for the future.
7. Measure contributions beyond the financial: Recognize and value the non-financial contributions you make within the relationship. Communicate the importance of caregiving, household management, and emotional support, aiming for a fair distribution of responsibilities.
8. Preserve your career trajectory: Continue investing in your career development, even within the context of a relationship. Maintain your professional network, seek growth opportunities, and regularly revisit your career goals.
9. Plan for retirement early: Take proactive steps to secure your financial future by exploring retirement savings options, such as superannuation. Seek professional advice to maximize your retirement savings and ensure long-term financial stability.

In the Event of a Relationship Ending:

10. Assess your financial position: Take stock of your financial resources and obligations. Develop a realistic budget and explore avenues to increase your income or reduce expenses as needed.
11. Seek legal and financial advice: Consult professionals who can provide guidance on managing financial matters during this challenging period. Understand your rights, entitlements, and options to make informed decisions.
12. Review legal and financial documentation: Ensure you have an updated will, power of attorney, and beneficiary designations. Review and understand the financial implications of any joint assets or debts.
13. Prioritise self-care and emotional support: Seek emotional support from trusted friends, family, or professional counsellors during this transitional phase. Emotional well-being is crucial for making sound financial decisions.

While love is undoubtedly a beautiful thing, it is essential to be aware of the potential risks it poses to women's financial independence. By actively pursuing financial autonomy within relationships, women can mitigate the consequences of the gender wealth gap, divorce, and relationship breakdowns. Empowering themselves through education, career development, and active participation in financial matters, women can ensure they are better equipped to navigate life's uncertainties and secure their financial well-being. By taking these steps, women can rewrite the narrative and create a future where love and financial independence coexist harmoniously.