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Never look a gift horse in the mouth (unless you’ve got a brother)

One small gift, one big gift

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Gifting and the gender biases towards children

The UN recently reported that the Covid pandemic could wipe out 25 years of the work done on gender equality in just one year. What’s even more alarming is how gender biases begin from a young age. In fact, this disparity begins as early as birth as friends and family unthinkingly gift pink items to girls and blue to boys. When it comes to money, we already know a gap exists between men and women, but even this financial discrepancy starts at an early age.

Boys versus Girls

Studies have shown that boys receive more pocket money than girls. Boys aged five to sixteen on average receive £10.70 per week from either an allowance or paid jobs and chores, whereas girls received 20% less with just £8.50 per week. As children get older, this pay gap increases to a difference of 30%.1 On top of this, boys get regular payments as cash and enjoy financial independence from an early age, while girls have their parents or grandparents buying them items or indeed managing money for them.

Women’s paltry pensions

Setting this tone so early on is worrying and indicates the different messages parents give their children about money management. This behaviour can also have profound implications on women’s eventual pension pots. Research from Aegon has shown that by the time women reach 50, they have on average only half the pension savings of £56k compared to £112k saved by men.2 This figure is compounded by the fact that women on average earn less than men and have breaks in  their careers to raise a family, or look after elderly relatives, making it more difficult for them to catch up.

Another contributing factor is that parents (and grandparents) are more likely to start saving for their son’s pensions than their daughters. Data from HMRC has shown in the past that more boys have money paid into their pensions compared to girls. Thanks to the benefits of compounding and tax relief it’s no wonder this gap widens over time. What’s counterintuitive is that women on average live longer yet have smaller pensions than men. It doesn’t make sense, and certainly isn’t fair.

Bridging the gap

It has become normal practice for many parents and grandparents to gift money to younger family members, and Christmas is as good a time as any to make these gifts. There are many reasons for doing this, whether it’s to reduce inheritance tax, meet the cost of school or university fees, or indeed help get children on the property ladder. Whatever the reason, there are benefits in using each child’s tax allowances. Both pensions and Junior ISAs form part of these and shouldn’t be overlooked.

The next challenge is for family members to stop perpetuating gender divisions and help both girls and boys by treating them equally in all aspects, including money. As adults, it’s our responsibility to help bridge that gap.

That’s why I contribute to Junior ISAs for my daughter and my son in equal proportions. I hope this sets a good example for others and that more parents and grandparents will consider doing the same going forward.

References

[1] Childwise – The gender pay gap starts at home – 2017 [Press release]

[2] Cofunds.aegon.co.uk 2018 21st century gender inequality as pension gap widens with age – January 2018 [online] Accessed at: https://www.cofunds.aegon.co.uk/content/ukcpw/customer/news/21st_century_genderinequalityaspensiongapwidenswithage.html [Accessed 08 December 2020]