The average woman gets shortchanged $1,300,000 over her lifetime. And while the “wage gap” between men and women is egregious, the “wealth gap” is even more alarming.
Women at every income level have less wealth than men.
Women own just 32 cents for every $1 owned by men. For women of color, the situation is far worse. The median net worth of Black women in the U.S. is $200 – twice the median wealth of Hispanic women. And for single Black mothers, median wealth is $0, making it next to impossible for them to weather a financial shock or invest in their children’s future.
If there’s an upside to any of this, it’s that there is an obvious and overlooked opportunity to dramatically improve the financial health of 50% of the U.S. population.
Women aren’t being well served and they’re getting richer every day. Today, more women are providing the sole or primary income for their families than ever before.
So how can fintech help women improve their financial health?
One factor that impedes women from getting ahead is rampant gender bias that causes them to pay on average an extra half percent APR on credit cards and higher mortgage rates than men. It’s no wonder the median debt for women is 177% higher than the median debt for men. It’s estimated that this gender bias costs women $165,000 over the average female lifespan.
Companies like eCreditHero are helping women – 80% of its customers are women of color – repair their credit for free, and provide weekly credit tips and seminars on common misperceptions via their online community forum. Through its credit repair tool and community-support forum, eCreditHero is empowering women to take back control of their credit situation.
Another financial challenge that hits women hard is a lack of retirement preparedness. While women are just as likely as men to enroll in an employer-sponsored retirement plan, eligibility rules often exclude the part-time labor force, two-thirds of which is comprised of women. Given the higher rate of part-time labor, unequal pay during their working years and time spent out of the workforce due to caregiving responsibilities, women are 80% more likely than men to be living in poverty by the time they reach the age of 65.
Fortunately, helping women with little to no savings build a financial cushion and plan for retirement is a solvable problem and one that fintech is well-suited to address. For example, EARN offers an online matched savings program to households earning less than 80% of the area median income. Approximately 75% of EARN’s users are women who earn an annual income of $21,000 on average. Despite their low incomes, these women are learning how to build a savings habit, and an impressive 83% continue to save after program incentives end.
There are also opportunities for fintech innovators to help women combat the “motherhood tax.” Wages for low-wage mothers decrease by 7% for each child they have, so there is a real need for better tools to help them manage and pay for expenses on a tight budget. Sheri Atwood, founder of SupportPay, is helping single moms (and dads) receive and manage child support. Having a transparent financial record of what it actually costs to raise a child dramatically improves the rate and timeliness of payment between parents. Parents who use SupportPay are 90% more likely to exchange child support as a result.
The opportunity for fintech to improve the financial health of women – especially low-income women and women of color – is massive. The current financial system is not only not working for women, it’s often working against them. At the Financial Solutions Lab, we seek to support innovators who are changing the future of finance for the better. And it’s about damn time we change the future of finance for women. We hope you’ll join us.
If you have a startup or nonprofit working to bring high quality financial products and services to consumers who need them most, we want to hear from you. The deadline to apply is April 27, 2017.