Had the unfair difference in incomes of men and women and the cost of unpaid labor women perform been invested, the amount would add up to over two and a half million euros over three decades. The unfair income disparities, stereotypes and loads of unpaid labor at home thus all prevent women from becoming millionaires. 

According to Eurostat data from 2022 the average monthly income of an EU woman stood at €2 619. Compare that to the average EU man whose income amounted to €3 095 a month. That’s a difference of €476 a month, and the pay gap of around 18%.  

Missed investment opportunity

Had these 476 euros been consistently invested every month in the 100% equity portfolio, the result after 30 years would amount to almost 665 thousand euros, assuming roughly 8% annual return rate.  

Even after accounting for inflation, with the average inflation in the euro area since 1999 of 1.83%, the investment would be worth almost 386 thousand euros expressed in real terms. Income inequality thus becomes a question of losing huge financial potential and not just mere injustice.

Create an account and start investing today

Let's Start arrow_forward

Lower income during active career negatively impacts the height of the future pension too. Pensions of EU women are almost 25% lower on average compared to their male counterparts. Therefore, let’s take a look at this issue too.

Financial assets that have been built by regular investing of the income difference throughout the active career can be converted into a regular annuity paid out upon retiring.

EU women live 84 years on average, and they usually retire at little over 64 years old. Using an annuity portfolio, they would boost their monthly pension by astonishing €1 990 in real terms (€3 430 in absolute terms after 30 years).   

A hidden loss that hinders wealth building

Driven mainly by archaic but persistent gender stereotypes, unpaid labor leaves a significant mark on income differences between sexes. Even in the 21^st century, big portions of the population believe (including women themselves) that woman’s main role is to take care of the household while the role of a man is more commonly associated with money.  

The reality, however, shows that despite the income differences between men and women  slowly diminishing, the huge disparity in the amount of unpaid labor persists. It has been a predominantly female domain for a long time. According to various sources, it is them who perform over 75% of all the unpaid labor.

It mainly consists of activities such as childcare, but household management and organization of its members too. Such activities are often overlooked by society, as though they weren’t happening. However, it is this hidden activity that leaves its mark on the loss of missed investment opportunities.  

Create an account and start investing today

Let's Start arrow_forward

Assuming that women perform 16 hours of unpaid labor a week, at the average hourly rate in the EU of €22.90, their labor should earn them a minimum of €1 465 per month.

Had this sum been invested regularly for 30 years (assuming return rate of roughly 8% p.a.) they would have accumulated over 2 million euros. Taking inflation into account, the value of the investment would be almost 1,2 million euros in real terms.

Income injustice and stereotypes prevent women from becoming millionaires

Pay inequality and unpaid labor constitute missed investment opportunities for women. The loss amount can be evaluated through the height of potential financial assets they would have reached had they been able to invest it.  

The loss amounts to astonishing 2.71 million euros per women (I.e. 665 thousand from investing the income difference and 2,05 million from investing the cost of unpaid labor).

If you’re interested in this issue and you’ve read until here, I have a little bonus for you! Passive investing presents a counterweight to unpaid labor. Unlike household chores, it can generate income without performing everyday activities. And that should convince any woman that hasn’t been doing so until now to start investing.

If you are the woman or you know one, whether it’s a friend, a girlfriend, a wife, a mom or a sister consider recommending Finax for financial management. Unlike unpaid labor, investing with us is relaxing. Furthermore, both of you get a referral discount of €1 000 managed for free for 3 years. For more information and details on the referral discount, please read this blog.