Lack of Savings Has High Cost for Women

Lack of Savings Has High Cost for Women

Monday, March 8, 2021

New analysis of 2020 Financial Health Pulse data by BlackRock’s Emergency Savings Initiative shows the costs that financial inequality can create for women – economically, psychologically, and physically.

Overall, women’s financial health trails behind men’s. As a result, women often turn to high-cost financial services that could be avoided by establishing emergency savings.  Nearly half of women (47%) can’t easily afford a $400 emergency expense, compared with just one-third of men (35%).

This new analysis from BlackRock’s Emergency Savings Initiative (ESI) examines the financial health and savings habits of women in the United States. While hardly the first report uncovering gender discrepancy in financial health, the Initiative’s analysis offers a stark reminder of the cascading effects that can occur in the absence of adequate emergency savings, leading to a host of other issues, such as debt and physical health challenges.

In an encouraging trend, however, many workplaces are adding employee benefits that are aimed at the realities of women’s needs. Now, as more institutions and policymakers – including the White House’s newly formed Gender Policy Council – look to develop solutions, it is important that they leverage data to inform those efforts.

Gains in Education and Debt for Women

In the past few decades, changes in policy, employer benefits, and education have helped women move ahead in the labor force in many ways. Women are graduating with four-year college degrees at higher rates than men, for example, according to the most recent data from the National Center for Education Statistics.

But those gains don’t always translate to better financial health. Higher graduation rates have come with a cost: one in four women (25%) hold student loan debt today compared with just 15% of men. Graduation rates also haven’t always translated into income parity: In 2020, the average gender gap for women was 82 cents per dollar earned by a man. The gap is even wider for Black and Latinx women.

Pandemic Impact Distributed Inequitably

This weaker financial position for women, in addition to an enhanced role in family social structures, makes them even more vulnerable to financial peril when crisis strikes − and the COVID-19 pandemic has further underscored this trend. More than 2.3 million women, compared with 1.8 million men, have left the labor force since the pandemic started in February 2020 through January 2021, according to the National Women’s Law Center. Now standing at just 57% participation in the labor force among women, this low has not been seen since 1988.

While popular media has dubbed this facet of the pandemic a “She-Cession,” analysis of Census data published in March 2021 shows that while millions of parents remain out of work, mothers have been returning to work and are catching up to fathers, whose employment has flatlined.

To be sure, even while employment rates by gender are evening out a year out from the pandemic’s start, the overall impact of a slow recovery could continue to impact women more in years to come as their starting point for pay and promotions is at a disadvantage.

Women Are Saving Less

Our new analysis from ESI draws a picture of greater financial precarity for women that starts with savings. In nearly all categories we examined, the data shows women have more volatility in income at the household level. Individually they have less access to and use of financial products, as well as more stress around basic necessities.

At the household level, when women do own these liquid accounts, they are less likely to save regularly in them, and have lower balances on average—potentially with more of their (lower) earnings being used to cover household expenses. Overall, women report household savings accounts with a median balance of $2,500 compared with a balance of $4,500 reported by men.

Turning to Costly Alternatives 

Almost half of women (47%) said they, as individuals, could not easily afford a $400 emergency expense, compared with 35% of men. In fact, 12% of women said that they wouldn’t be able to pay for the expense at all.

Even when women do plan to cover the expense, they turn to high-cost options more often than men likely as a result of having less in savings. More than one-fifth of women (21%) would put the expense on a credit card and pay it over time. They would also turn to payday loans, bank loans, or lines of credit more frequently than men. Using high-cost debt can have detrimental effects on longer-term financial health, costing more and leading to a cycle of debt that can be hard to break.

Women also rely more heavily on family and friends, with 14% turning to borrowing from them in case of an emergency. While this can indicate the strength of communities that women create, a widespread emergency (like COVID-19) can rip away these support options as entire networks of families and friends are adversely affected at the same time and unable to help each other.

Women are also more likely to carry credit card debt than men: 43% of women compared with 39% of men. For Latinx women, credit card debt is even more common at 51%.

Stressors Amplify the Cycle

The precarity of women’s financial health is also reflected in their stress. As individuals, women are significantly more stressed about covering basic needs than men. More than one in five women (21%) worried that their food would run out before they had money to buy more. At least 16% of women said that they had trouble paying their rent or mortgage in the last 12 months.

Our last few years of Pulse data have shown that these challenges for women are not new – they existed prior to the pandemic. As a result, many women have very little flexibility to manage expenses in an emergency.

Our analysis shows that women are also likely to postpone or avoid medical procedures because of cost considerations: 16% of women said they or someone in their household did not receive necessary medical care and 11% said they did not purchase necessary medication because of costs. As discussed above, women also turn to higher-cost debt to manage emergencies, resulting in greater medical debt for women (24%) than men (15%).

Other data from JPMorgan Chase Institute has shown that extraordinary medical payments represent “a higher fraction of [women’s] monthly take-home income” compared with men’s. That data also showed that 12 months after a major medical expense, women’s credit card balances were 14% higher than baseline levels and only 3% higher for men.

The cost of seeking healthcare is most pronounced for women of color, and in particular for Black women – 40% of Black women have medical debt compared with 21% of White women and 26% of Latinx women, our analysis showed.

One underlying reason for this level of medical debt may be connected to insufficient savings. In our 2020 ESI analysis of savings and Black individuals (men and women), we found the median savings account balance at the household level across all Black individuals surveyed was $600, as compared with $4,000 for the equivalent for White households. For Black women at the household level, this number dropped to $400 as a median savings account balance. The median savings account balance at the household level for White women is $3,275, compared with $1,500 for Latinx women.

Looking to the Future

Our report shows that women simply don’t have as much money in emergency savings as men, and have intricately woven relationships between their own individual finances and those of their households. Take account of structural factors, like lower and more volatile earnings, and it becomes clearer how many women are pushed into making choices to use debt and forgo healthcare that can impact them negatively in the long run.

As policymakers, employers, and other institutions make decisions that will impact women’s financial health, one question to pose is: “How can women receive the support they need to build emergency savings?” The answer to that question is varied, and solutions cross systemic, institutional, and individual layers.

Even with the progress that has enabled women to move ahead in the labor force, we can’t ignore emergency savings as the foundation of financial health – that’s why this should be a priority for policy makers, and employers, going forward.


Data analysis was conducted by BlackRock’s Emergency Savings Initiative on data collected from the Financial Health Pulse, a research initiative supported by the Citi Foundation. The survey of 6,668 respondents was live from April 20 to May 7, 2020, and asked questions which were point-in-time and/or “in the past 12 months.” We defined women as people who self-identified as women in the Pulse survey. As noted in the text, some questions about respondents’ financial situations, such as their income or whether they received stimulus payments, were asked at the household level to provide a holistic picture of people’s financial lives. Questions about attitudes, experiences, or sentiments were asked at the personal level to reflect the views of the individual survey respondents.

BlackRock’s Emergency Savings Initiative

BlackRock announced a $50 million commitment to help millions of people living on low to moderate incomes gain access to and increase usage of proven savings strategies and tools – ultimately helping them establish an important safety net. The size and scale of the savings problem requires the knowledge and expertise of established industry experts that are recognized leaders in savings research and interventions on an individual and corporate level. Led by its Social Impact team, BlackRock is partnering with innovative industry experts Common Cents Lab, Commonwealth, and the Financial Health Network to give the initiative a comprehensive and multilayered approach to address the savings crisis. Partners including UPS, Mastercard, MX, and Self Financial have joined BlackRock’s Emergency Savings Initiative to help their employees and customers take the essential first step toward long-term financial well-being.