How Women Are Handling the Inflation Crisis
With the current inflation affecting all aspects of life, women are handling financial issues differently than men — especially since this crisis is affecting women in a larger way.
In a study conducted by Voya Financial in January 2023, researchers asked 1,000 people aged 18 and older to better understand the financial impact of inflation on U.S. households. The survey found that 70 percent of women say they’re spending less on nonessential luxury items as compared to 52 percent of men.
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In contrast to previous reports by WWD, Kerry Sette, vice president of the head of consumer insights and research at Voya, said, “Inflation is simply making it harder to make ends meet. Women are controlling what, where and how they spend their money to get by. Women, who are often the primary shoppers of a household, are trading down to store-brand labels and putting off large purchases to control the family household expenditures.”
Moreover, there are several crises all at once, said Sette, listing “long-term economic uncertainty, market volatility, rising interest rates, the war in Eastern Europe, the highest inflation we’ve seen in decades, coupled with a mental health crisis because of continued isolation during the coronavirus pandemic.”
Thirty-one percent of women have delayed or canceled planned expenditures such as home maintenance, compared to 19 percent of men. Furthermore, 22 percent of women have started to put off their health care and medical expenses, versus just 14 percent of men. Sette said Americans are starting to put off medical expenses, which will have long-term repercussions on the future of health care spending, with women holding back on paying for necessary prescriptions, doctor visits and more.
“We’ve even seen Americans putting off health care expenses similar to putting off large electronic purchases, which will ultimately have long-term consequences on future health care spend, especially if women are putting off purchasing much-needed prescriptions, doctor visits and more,” Sette said.
Almost 70 percent of women have reported that they felt simultaneously frustrated and nervous about their financial situation during today’s uncertain economic climate. The financial anxiety for women is higher because the burden most often falls on them for many things including care for children and family expenditures and purchases. Thus, women are more likely to make tradeoffs in this area than men.
“Many Americans, especially women, are having a challenging time covering basic monthly costs (e.g., mortgage or rent, gas, utilities, groceries) due to inflation,” Sette said. So, it’s not surprising that women are feeling more frustrated and nervous about their personal finances than men and, at the same time, are less confident about their long-term savings goals, such as being prepared for retirement.”
Sette shared that she’s not surprised by the research’s findings because there have been persistent lower levels of financial well-being among women.
Over the years, a large shift has occurred in women holding more financial assets. Notably, a report by McKinsey Global Institute found that this is only going to increase. And since women outlive men by an average of five years, a massive shift of the wealth transfer to women is set to come by 2030. The study found that in August 2020, women held $10.9 trillion of $35 trillion of the total household wealth.
Despite this, Sette said there was a massive disparity in how women were affected by the pandemic — women were more affected by a loss of income and caregiving/homeschooling fell onto the women as more left the workforce altogether at record-high rates.
“Women are overextended and under-rewarded at work (cue the Great Resignation, the Great Reconsideration, the Great Breakup) where you see that for every woman at the director level who gets promoted, two women directors are choosing to leave their companies,” Sette said. “Let’s also remember that women still make less than men, are significantly underrepresented in leadership positions and are less likely to get promoted — especially at the highest levels. And when they do, their share of household responsibilities remains high compared to men.”
Sette predicts that women will remain more careful when it comes to spending decisions and be more intentional with their purchases and purchasing behaviors. Women’s current financial well-being is on the decline and it doesn’t show any signs of improvement moving forward.
What does this mean for retailers? Sette advised companies to keep in mind the financial stability, freedom, mental health and wellness of women are impacted by inflation. Marketers should keep in mind the anxiety they are feeling and offer to make their lives easier. Furthermore, the day-to-day financial goals regarding budgeting and controlling spending are a priority — and a struggle for many.
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