The inequities start early
The wealth gap between women and men starts early—often during childhood and before money is even involved. As young girls are growing up, conversations about money tend to focus on spending habits rather than investing. The opposite is generally true for boys. And that’s just the beginning of a disparity that continues into adulthood, including factors such as the wage gap, higher student loan debt, and markups on products and services marketed to women.
By talking about money and investing earlier and more equitably, we can help teen girls (and their guardians) understand why investing is so important for helping with long-term goals, future financial health, and self-reliance. We can help close the gender wealth gap.
Girls aren't taught about investing at the same rate as boys.
When parents and other guardians start talking to children about money (even during casual and ambient conversations at very young ages), there is a tendency to focus on spending habits when talking to girls. This aligns with what is seen in adulthood, with women in charge of 80% of day-to-day household finances but less involved in investing.1 Research shows that parents and guardians, particularly men, are more likely to have conversations about investing with boys, and they give them a preferential bias when it comes to money. Again, this parallels what is seen in adulthood, with men investing at a higher rate than women.2
These early conversations are often the start of a lifelong pattern where women are less likely to see investing as important to their future and talk about money less—to their peers, partners, and with employers in situations like salary negotiation. Additionally, girls and boys do not see building wealth at the same level of importance: 30% of teen boys want to pick a future career that helps them make as much money as possible, compared to only 21% of teen girls.3
When asked how they would choose a career, the girls in the study prioritized being fulfilled and finding the right fit, whereas the boys were more focused on becoming financially independent from their families. This research is complicated, however, because social conditioning often tells young girls that a wealth-driven career isn’t appropriate for them, particularly if they hope to have a family. The messaging starts early that girls shouldn’t prioritize money.
Changing the future
The good news is that 90% of parents believe their children should be able to invest in some way.4 What's tricky is how to put that belief into action and making sure it's equitable.
Children’s first exposure to investing will usually be secondhand—how it’s talked about (or not talked about) and done (or not done) by the adults in their lives. If their earliest years are spent associating gender roles with certain financial responsibilities (like investing vs. day-to-day spending), it will likely be difficult to teach them to do something other than what they’ve seen modeled in their everyday life. So no matter who is doing what in a household, make sure they understand that each adult has transparency and insight into all of the family finances and that decisions are made together. (And if this isn’t the case, then work with us so we can help get you there.)
When you’re ready to start having conversations with a child about money—regardless of their gender—plan for the age when you will start talking about spending (as early as the toddler years), as well as the age when you will start talking about investing (as early as elementary school). Setting a formal date for each topic can help ensure the conversations happen so that you feel prepared and comfortable, without being rushed, and with resources to share. In addition to scheduled conversations, talk about it contextually, in everyday life too—this will help them later in life when they need to talk to their peers, employers, and potential partners.
Girls are given less money for chores and allowance.
Though invisible labor is generally thought of as the unpaid, often unseen tasks of taking care of a household and family, it’s not just adult women who typically do more. In families where children are paid for household chores, fewer teen girls report being given money for their chores than teen boys.3 This means that not only does invisible labor start early, but so does the wage gap: Many teen girls end up with less money for spending and investing.
Changing the future
There are several ways to approach chores and allowance. One is not having a quid pro quo, and instead, have a set allowance and set chores; the child does the chores because they are part of the family, and receives their allowance regardless of what they do each week. (And if they don’t do their chores, the consequences are not related to their allowance.) If you do give allowance related to chores, ask yourself how you decided on the assignment of chores and how much to pay, checking for gender bias. If you have more than one child, compare how much you are giving each and for what. Is everything equitable?
Adults are opening fewer 529s for girls4 and contributing less for college overall in households with only girls.
The 529 account can be an accessible way to save for kids’ education expenses since it can be used for any child, and anyone can contribute. Yet statistically, only 39% of households with girls saved money for college, compared to 50% for boys, despite women being 60% of college graduates.5 This potential disparity not only adds to the overall wealth gap, but it’s a contributor to two-thirds of student debt being carried by women, much of that by women of color.6 It contributes to a gender wealth gap and a racial wealth gap.
There is also an opportunity cost: Not contributing to girls’ 529s means there may be fewer conversations about saving for college and why it’s important. That’s another lost opportunity to talk about the power of investing and compounding interest over time, particularly when starting at a young age: If young girls have fewer accounts, there are fewer opportunities for these investing conversations.
Changing the future
Saving toward education isn't always about how much is being invested—there can be benefits even with small amounts. For example, there aren’t minimum contributions to a 529 account, so they can be opened with any amount and contributions can be made whenever possible. Some states even have incentives to open a 529 account. Just having the account will allow for discussions, contributions from friends and family, and for the potential future financial equity.
Guardians are opening fewer investing accounts for girls.
By the time girls reach their teen years, they’ve had fewer discussions about investing, have gotten less money for their time and chores, and are less likely to have had someone save on their behalf. So it shouldn't be a surprise that far fewer teen investing accounts are opened for girls.4 Up to this point, they haven’t been given much incentive or motivation to do so: Research shows that teen girls do not view stock trading and other investments as important to their financial success as much as teen boys.4 Overall, the goal of building wealth through investing isn’t prioritized as highly—for teen girls or by teen girls.
Changing the future
In addition to changing earlier behaviors, it’s critical to educate teen girls on several aspects of investing. First: Why it’s important, useful, and powerful for their goals and their future, and how building wealth can be a tool for independence, for helping others and for giving back, and for having choices in the future. Though that can be a tough sell for teens in general, it’s still a critical point to reiterate repeatedly. Second: How to do it, as well as access to both the education and the tools they need to get started. This is often where the generational gender investing gap comes into play. If the parent or guardian isn’t comfortable investing or doesn’t see how it’s important for saving for the future, then they often don’t feel equipped teaching the child how to do it.7 It can be important in this situation to reach out to a professional—and perhaps even learn together. Sometimes the best way to get a child motivated is to do it together.
Girls are using their investing accounts less, including less money invested.
Once these earlier biases have been overcome and the teen investing account has been opened, there is still more disparity to overcome. What often happens with teen accounts is a precursor to what commonly occurs with adults: Statistically, girls and women keep more money in cash and less money invested overall. Additionally, girls report feeling their parents are more involved in managing their money for them,3 which could be an indicator of less autonomy.
Changing the future
During a recent Women Talk Money event, approximately 80% of respondents said they would invest more if they knew more about how to do it. Yet the education just isn’t happening—during childhood, the teen years, or even in adulthood—and so women are investing at lower rates.
There is frequently a pattern of generational habits, meaning a repeat from parent to child of the same problems: Adult women often haven’t invested and don’t feel like they know how to invest, so they don’t feel qualified to pass that knowledge or know-how on to their daughters. Men who are parents consistently report a higher level of knowledge of money than women who are parents.4 Yet it’s clear that the enthusiasm is there if the education and opportunity is also there—and can, and should, start early in childhood. It’s important to find role models and mentors who can help educate and guide, even if it is someone outside the family or a professional.
What's next
When these facts and behaviors are looked at holistically, the emerging picture shows that all too often, teen girls haven’t been taught that investing is a priority or a right—for their goals, for their future, for their potential wealth, for a future of self-reliance. As the years go by and these inequities compound, women invest less, so there is less money with the potential to grow—and that’s part what of what widens the wealth gap.
Ready to take the next step?
In addition to talking about why investing is important for young girls, and how to do it, taking action can make a big impact in creating lifelong habits. Though each account serves a different goal, they can all be used to help teach a child how investing works. Some fully belong to the adult and the child can observe (like the custodial account) and some fully belong to the child with your oversight (like the Fidelity Youth Account).
- Fidelity Youth Account Is your teen ready to start investing on their own (with you keeping an eye on them, of course)? The Fidelity YouthTM Account and app can help them get their feet wet.
- Roth IRA for kids A Roth IRA for kids allows a child to start investing as soon as they have their own earned income—this could be from a lemonade stand, babysitting, or a summer job. It can be a great way to show them the ropes and get them into the habit early.
- 529 accounts If you’d like to save and invest in a tax-advantaged way for your child’s, your own, or someone else’s (broadly defined) education expenses, then you might want a 529.
- Custodial account In this brokerage account, the investments are controlled by the adult only until the designated minor is of age. It can be a great education savings vehicle or to give as a financial gift upon the minor reaching a designated age.
Or you can use this tool to answer a few questions and find out which type of account might be a good fit.
How is Fidelity working to change the gender wealth gap?
We are committed to changing the narrative, changing the rules, and doing what we can do to change the future. These are a few of our programs and partnerships:
- Women Talk Money is a community—for women, by women—that talks candidly about the financial realities of being a woman (the pay gap, the pink tax, invisible labor, longevity, and more). Our goal is to help close the gender wealth gap.
- Fidelity Financial Forward is a literacy program supporting K-12 students and teachers in underserved communities.
- Invest in Girls is a national partnership with regional programming to provide financial literacy programs to teen girls.
- Seeds of Fortune works with young women of color in high school to build college, financial, and career skills.
- Boundless is a development program designed to empower high school and college-aged women in their career decisions.
- CT Sun high school youth camps focus on financial education.