Millennial women lag behind millennial men on a couple of key money metrics, like the amount they have in emergency savings and the feeling that they're financially adequate, according to a new report from MetLife.
Just 54% of millennial women report feeling in control of their finances, compared to 76% of men in the same generation (those ages 23-36), reports MetLife's 17th annual U.S. Employee Benefit Trends Study, which surveyed 2,675 full-time employees of all ages. Additionally, only 48% of millennial women say they have three months' worth of emergency savings, while almost 70% of men do.
While six in 10 employees of any age say they are confident in their financial well-being, per the study, around half also report living paycheck-to-paycheck. There is a pronounced gender difference here too: Overall, 55% of women report living paycheck-to-paycheck, while just 44% of men do.
Previous reports have also found that women and men tend to approach money differently. Men are more likely to take risks, such as investing in bitcoin, while women generally prefer more conservative products, like money market funds or CDs.
Although MetLife's report did not delve into the reasons why millennial women feel less confident about their finances, past studies have found that lower average salaries (the study found that 49% of millennial women report that their salary is less than $50,000, compared to 23% of men), more time out of the workforce and a longer life expectancy can put women at a financial disadvantage over the course of their lifetimes. And women, on average, graduate with more student debt than men.
All of these factors can lead to feelings of stress and inadequacy.
"We can infer that [millennial] women's responses around other financial indicators contribute to them feeling less in control," a spokeswoman for MetLife tells CNBC Make It. "Over half" of them "live paycheck-to-paycheck, which likely impacts their feelings of insecurity and ability to pay off their credit cards and put aside savings."
"In addition, nearly three quarters express concern about being able to save for a big expense or purchase," she adds.
On top of these structural disadvantages, the so-called pink tax increases the prices of everyday products geared toward women. Girls' clothing, for example, is 4% more expensive than boys' clothing, while women pay 13% more than men for products like deodorant, according to NYC.gov.
MetLife's report did not ask what respondents spent their money on, but it does note that, of millennials who have a second job, 43% of women took it to make ends meet, compared to 38% of men. Likewise, 36% of the women with a second job took it to help pay off debts, compared to 32% of men.
Emergency funds, in particular, are crucial to financial well-being, and having enough money set aside can alleviate feelings of financial stress and insecurity. Women, especially, need to prioritize building their cash reserve in case they need to take time out of the workforce to care for a child or older family member, Monica Sipes, Senior Wealth Advisor at Exencial Wealth Advisors, tells CNBC Make It.
"It is even more important for women to have an emergency fund in the event of unforeseen life events, such as divorce or a child's illness," she says.
Most financial experts recommend saving enough to cover expenses for three and six months, while others, like Suze Orman, best-selling author and host of the "Women and Money" podcast, says you should aim for eight to 12 months' worth of savings.
"You need as much money in the bank that makes you feel secure," Orman said at the 2017 eMerge Americas conference. "Don't go fooling yourself, 'It's okay, I can charge on a credit card, I can do this.' You should have at least eight months. Not six months, not three months, I'd like to see you have eight months to one year."
No matter how confident you feel about money, if you want to improve your finances, you can start by paying yourself first. To do that, automate your savings by setting up a regular transfer to a savings or investment account from your paycheck through your bank. You can also use an app to help you.
"When your paycheck gets deposited, move money automatically from your checking account into a separate money market account or a separate savings account that you won't touch," David Bach, co-founder of AE Wealth Management, tells CNBC Make It. "You literally want to almost forget it's there."
Here are some other tips to get started saving:
- 10 small things to give up if you want to save more money
- 8 tips to save a fortune, from everyday people who are retiring before 45
- 6 smart ways to save your money, according to people who've socked away thousands
- 8 strategies for saving money from a couple that banked $50,000 last year
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