The COVID-19 pandemic and the severe financial disruptions it has caused are defining moments in history for many Americans, particularly women. It’s similar to the impact of the Great Depression, Great Recession, and other watershed moments, according to new research from Capital Group/American Funds.
The pandemic has had an outsized financial impact on women versus men, particularly millennial women and women of color. The study also reveals that women are engaging with their finances and expanding their networks to build more resilient financial futures.
Additionally, the findings uncover where women are turning to for financial help and guidance as a result of the pandemic’s outsized impact on their finances, presenting an opportunity for the financial services industry, government authorities, and educators to adapt how they reach out to and communicate with women.
“The study suggests a long-term shift in financial decision-making, especially among women. This goes well beyond the near-term behaviors one might expect in moments of volatility,” Heather Lord, senior vice president, strategy and innovation at Capital Group, said in a statement. “This could be due to the pandemic’s outsized impact on women and women’s willingness to talk about money among their networks of family and friends. The data highlights opportunities for financial professionals to meet women where they are and build more inclusive investment and communication systems that help women increase financial resilience.”
COVID’s outsized financial impact on women
Stark differences between women’s and men’s experiences of the pandemic and their approaches to their finances emerged from the survey.
While men’s approaches to finances remained relatively unchanged, women’s behaviors toward money have changed markedly since the COVID-19 pandemic erupted.
More than a quarter of the women surveyed (28%) say they reduced or stopped contributions to employer-sponsored retirement plans during the pandemic, and an equal number expect the events of the past year to delay their retirement. In addition, the survey revealed:
- More than half of women (53%) who hold a full-service taxable brokerage account either stopped contributing or withdrew funds.
- Among women with an employer-sponsored retirement account, 44% reduced or stopped contributions, or withdrew funds.
- Half of women (50%) with a college savings account reduced or stopped contributions or withdrew funds.
Notably, four in 10 women expect 2020 to have a long-term impact on their finances and nearly two in three women express they would have done something differently to prepare for 2020 if they had known what was coming.
This stands in sharp contrast to men, a quarter of who say they are not concerned about personal finances and who overall were also more likely to feel confident, knowledgeable, satisfied, and calm toward their finances over the course of 2020.
Women of color financially affected
Women of color and millennial women are the groups most likely to have had someone close to them lose a job, be forced into working fewer hours, or have pay reduced, according to the survey.
In particular, women of color and millennial women are most likely to turn to social media for financial help and guidance before other sources and are more likely than other groups surveyed to give and receive financial assistance to and from family and friends.
Women of color are more likely than white women, as well as women overall, to express concern with various aspects of their personal lives including personal finances, health, psychological or emotional health, and their careers. Similarly, women of color are more likely than white women to feel financially anxious about what may happen in the future.
In fact, nearly one in three women of color say they would have saved more in an emergency fund, more than one quarter say they would have spent less on day-to-day items, and 20% say they would have paid off more debt if they could have predicted the events of 2020.