A big shift is happening, and women are front and center of it. Women (finally) are in a position to influence the global economy and causes that matter to them, and we’re here to explain what’s behind this transfer of wealth.
According to McKinsey & Co., women are poised to control about 34 trillion, or approximately 38%, of investable assets by 2030. 10 years ago, it was 7.3 trillion, or roughly 29%.
Who, What, When, Where?
The Silent Generation and Baby Boomers are propelling the shift in women’s wealth. Women, who typically outlive men by at least five years, are becoming the financial head of the household due to inheritance, career success, or divorce. That means Gen X and Millennials are next in line to receive the wealth left behind in addition to their career income. They’re likely to funnel funds towards supporting women-led businesses or industries catering to women’s and families’ needs.
A recent Bloomberg article reports, “In Western Europe, women currently hold about a third of total assets under management at about 4.6 trillion euros ($4.85 trillion), according to McKinsey. That’s expected to grow to 45% by 2030. During that period, women’s assets are slated to compound at 8.1% annually, compared to just 2.7% for men. At that rate, they could approach parity with men by the early 2030s, according to the consultancy.”
The shift in women’s wealth has already begun and will peak between 2030 – 2040. The receivers of wealth (Gen X and Millennials) approach money differently than older generations. For example, they’re more likely to invest in purpose-driven organizations and be actively involved in financial decisions.
Gender Pay Gap vs. Gender Wealth Gap:
Women are controlling more significant sums of money globally than ever before. However, that doesn’t mean there’s been a dramatic shift in the pay gap. To clarify, the gender pay gap means women make about .84 to every dollar a man makes.
The gender wealth gap is different. The wealth gap is how much women have and keep – their cash, investments, and real estate minus their debt. The wealth gap means they own .32 to every dollar a white man owns. Latina and black women own about a penny to the dollar. However, women may not be able to close the wealth gap in the next two decades, but they will shorten the distance significantly.
How The Shift Impacts Women’s Future and the Causes They Care About
As mentioned earlier, when more women gain control of wealth, it has the potential to impact entire industries. There will likely be a boom in funding for women-led startups, especially for organizations focusing on women-focused products and services. When women have more money within their control, they funnel it back into industries that balance their needs and the needs of future generations.
According to the Lilly Family School of Philanthropy at Indiana University, as women have access to greater wealth, philanthropic organizations around the world will benefit. Empathy drives their donations, while men tend to donate based on their interests. Gen X and Millenial women are more likely to spread their wealth across multiple organizations versus focusing on one cause, especially towards social justice and climate causes.
The Bottom Line:
Women’s decisions about how they invest today will likely majorly impact the global economy. How they plan to invest and manage wealth will compound over time, and the earlier they start, the greater the impact. This seismic shift will undoubtedly influence generations, industries, and causes that matter to women and their families.
Photo Credits: Olia Danilevich, Pexels
