Here's What Millennial Women Need To Know About Money And The Pay Gap In 2019

“My generation failed you. Completely failed you,” said Ellevest CEO Sallie Krawcheck. “We played the game the way it was laid out.”

It’s 2019, and despite a lot of talk about gender equality, the pay gap persists.

Equal pay is a big issue, and it’s even the subject of a bill that recently passed the House and is now in the Senate. Women in the US still earn about $0.79 for every $1 a man earns, on average, according to estimates in a new Glassdoor report. The Pew Research Center estimates it to be $0.85. And while the gap is narrower for millennials than it is for older workers, women ages 25 to 34 still earn 86.8% of what men their age earn (it’s 80.1% for women ages 35 to 44), according to the Bureau of Labor Statistics.

The point is, the gender pay gap still exists for young adults, and it’s is even wider for women of color. And this, according to Sallie Krawcheck, CEO of the women-focused digital investment platform Ellevest, is precisely why women need a tailored approach to managing their finances and investing. Krawcheck, previously dubbed the most powerful woman on Wall Street, launched Ellevest in 2016, which “uses an algorithm that accounts for gender differences related to women’s pay, career breaks, and lifespan.” Unequal pay perpetuates a gender investing gap, she said.

For one, “The retirement savings shortfall is a female crisis. We retire with two-thirds the money of men,” and yet women have a longer life expectancy, Krawcheck said at a Women’s History Month event hosted by BuzzFeed in March. That’s a long-term concern, but a real one.

Only 56% of millennial women have started saving for retirement, compared to 61% of millennial men, in a 2016 survey by Wells Fargo. “The wage gap between male and female millennials clearly exists, and it’s a real issue. It’s important that younger women focus on saving and investing now, as this strategy will help put them in good standing for their retirement years,” said Joe Ready, head of Wells Fargo Institutional Retirement and Trust, at the time.

The bottom line: We have to remember to take care of ourselves financially, Krawcheck said, and to take care of fellow women in the workplace too. “My generation failed you. Completely failed you,” she said. “We played the game the way it was laid out.”

There’s nothing simple about figuring out how to manage your money, especially if you have student loans, credit card debt, and don’t have a ton of income. The median earnings of millennial women who worked full time was $39,000 in 2017, according to Pew Research Center.

That money has to take care of basic needs, emergencies, and retirement, and — if anything is left — it should be put aside for investments that can grow, even if only moderately, so we can do all the things we want to do for ourselves and our families.

It can seem overwhelming and exhausting to think about, but, you CAN do it! Even if it’s only a few dollars at a time. And there are methods for managing your finances that can help get you closer to your goals, whatever they may be. Here are some tips for real people.

Step 1: “In order to invest, the thing you must do is pay off your credit card debt. That stuff is poisonous, it’s toxic, it’s expensive,” said Krawcheck.

In fact, the average annual percentage rate on credit cards by the end of March was at a record high of 17.67%, according to, which does a weekly rate report. “I hate to say it, but if you can’t [buy] something without rolling it over on your credit card, you can’t afford it,” Krawcheck said.

Step 2: After paying off your credit card debt, “you need to build an emergency fund.”

“That’s three months of take home pay when you’re younger — six months when you’re older and more mature — that is there when tough things happen,” said Krawcheck.

Again, women lag behind men when it comes to savings as well: 56% of women ages 18 to 34 have savings, compared to 70% of men, according to survey data from the National Foundation for Credit Counseling. An emergency fund can help reduce your reliance on credit cards and other debt, which come with interest, when unexpected situations arise.

Step 3: Put aside money in a 401(k) for retirement, especially if your company will match some portion of what you put in. You can also save outside of an employer plan through an IRA.

Retirement may seem far, far away, but we all have to consider how we’ll pay years, and possibly decades, of living expenses when we no longer have an income. “On average, a female retiring at age 65 can expect to live another 21 years, nearly three years longer than a man the same age,” according to the US Department of Labor.

So save — it’s one of the things that you can’t specifically borrow for. “You can at least get a loan for college, but you can’t get a loan for retirement,” said Krawcheck.

Step 4: You should invest the money left after you set aside savings for retirement. Carefully. “Invest a little bit of every paycheck: whether it’s 1% or 2%. Whatever it is to get yourself in the habit,” said Krawcheck.

Remember: As long as the market rises, investment gains compound. In 10 years, an investment of $100 that grows at 4% annually will be worth $148; $1,000 becomes $1,480; $10,000 becomes $14,802, and so on. This is a crude example, and while you can’t guarantee how investments will perform, putting away money in most funds is better than having no strategy. That is, unless you’re making extremely risky bets on, say, cryptocurrency. Then you might want to proceed with caution.

Now you might be thinking: OK wait, I would love to start investing, but what if I have a lot of student loan debt? I’m making the monthly payments, and things are TIGHT. If there’s any money left at the end of the month after paying off my credit cards, saving for an emergency, and stashing away for retirement, should I just put it toward paying my student loans rather than investing it?

If you have a low interest rate on your student loans, you might do better investing that cash. Krawcheck said, “If the [interest] rate that you’re paying is above 7%, you want to get that paid off first; you’re typically not going to earn that [rate] in a diversified investment portfolio. If they’re 4% or below, I know it’s no fun, but ... just keep paying it on time” and put the rest in investments with a record of performing better than that.

Of course, if the markets are weak, it’s probably a good time to pay off loans instead. And in the end, if student loans weigh heavily on you, getting them off your plate sooner can provide priceless peace of mind.

By the way, Krawcheck has strong ~feelings~ about student debt. “The student loan crisis is just a disaster and may in fact be the next bubble that hits this country. It may in fact be the next wave of defaults.”

“Like a number of things in this country, it’s just cruel that we put out this American dream in which you have to go to college to get ahead, but rich people can cheat their kids’ ways in, or to give money to get them in. But for everyone else, they need to take out crushing student loan debt. And then the jobs may or may not be available to you,” said Krawcheck.

She added that the there is a gender student loan gap too: “We women pay the same for the education as the guys do, but then when we make less over the course of our lives, it takes us longer to pay back.”

So, what’s the big picture? And what salary do I actually need to participate in these best practices? In an ideal world, you should be spending 50% of your income on basic needs and expenses, 30% on fun(!), and 20% on savings and investment. It’s called the 50-30-20 rule. I know, I know, that might assume you’re earning a lot more than you are, or that your expenses are lower than they are. This is especially true if you’re earning close to the minimum wage or are a contract worker with no employee benefits.

Here’s how Ellevest describes the ratio, which is widely used by other advisers as a rule of thumb:

50% goes to needs. This includes bills, groceries, transportation, housing, minimum debt payments, work clothes, and other things that you have to pay for.

30% goes to wants. You don’t need rooftop margaritas, Netflix accounts (no, really), or trips to Milos … but fun is important.

20% goes to Future You.
Three things in this bucket: debt payments above the minimums, saving, and investing.

It’s hard to say how much you must earn: It depends on your particular expenses. But if you calculate your housing, bills, food, and debt payments — which are more or less fixed — and consider that figure to be the “50% needs,” your salary should be at least twice this number. That’s one place to start thinking about how much you need to be make to support this lifestyle.

If the math isn’t adding up because your needs alone are 60% to 70% of your salary (which is easy if you live in an expensive city or if you have a lower-paying job), you can consider some lifestyle changes: cutting spending on your needs (i.e., moving to a cheaper place) or reducing the share of your salary that goes to wants (making the ratio 65-15-20, for example). Or, you can think of ways to make more money.

Yes, more money, please.

This may seem more like an aspirational sentiment than concrete advice, but it’s not a bad goal, right? Men in the workplace have an essential role to play in eliminating the gender wage gap, of course. But one thing women — especially those with some authority in their workplaces, particularly, in many cases, white women — can do is help each other toward this end. “We all have to go on this together, right?” said Krawcheck. “Promote each other, talk each other up, refer each other for jobs. Share your salary, tell people how you got the raise. Just for every step forward you take for yourself, raise somebody else that step or two forward as well.”

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