Women in Canada are more educated, more accomplished, and more economically productive than ever before. And yet, data shows that women in Canada retire with less wealth, face greater financial insecurity following divorce or the death of a partner, and have lower financial confidence and literacy than men.

These trends are not a reflection of individual failure but rather a consequence of systemic inequities that disproportionately impact women: the gender pay gap, career interruptions for caregiving which impact pension and RRSP savings, a higher likelihood to work part-time with fewer benefits, lower average wealth at retirement, and a financial services industry that historically talked down to women.

At Adeline Financial & Career Coaching in Winnipeg, we believe that financial independence is not just an end-goal for Canadian women, but a safety net, a confidence booster, and a foundation for pursuing all other goals. In this guide, we discuss the financial realities of women in Canada at different stages of life and provide actionable guidance for building financial independence, at any starting point.

Financial Reality Facing Canadian Women

To plan your finances effectively, it is important to understand how the financial challenges specific to women affect your financial goals. Here are some facts every Canadian woman should know:

• The gender pay gap in Canada: In Canada, as in many other countries, women continue to be consistently paid less than men for the same work. According to the latest data from Statistics Canada, women working full-time jobs earned approximately 89 cents for every dollar paid to men. There is also a racialized earnings gap, with women of colour earning significantly less than white women.
• The motherhood penalty: Canadian studies show that women’s earnings tend to peak earlier in life, while men continue to increase their earnings throughout their careers. The phenomenon is often referred to as the “motherhood penalty”.
• The value of unpaid care work: Women provide a disproportionately high amount of unpaid care in Canada, for children, seniors, and persons with disabilities. This poses significant financial challenges to women in terms of balancing care and employment and impacts their ability to save for retirement.
• Lower savings for retirement: Due to the gender pay gap and career interruptions for caregiving, Canadian women have lower average wealth at retirement than men.
• Women live longer than men: On average, women in Canada outlive men by approximately four years, which means they have to make their retirement savings last longer.
• The risk of financial dependence: After the death of a spouse or following a divorce, women have a significantly higher risk of experiencing financial hardship.

Financial Planning for Women in Their 20s: Laying the Groundwork for Financial Independence

Your 20s are when the financial habits you develop influence your financial security in retirement years. The rule of thumb in financial planning is that the earlier you start, the better – due to the power of compounding. As such, it is important to build financial foundations in your 20s. The financial planning advice below applies to young women, including in their early twenties who may be just starting to think about their finances.

Start Building Credit

Having credit-building in your own name in Canada is essential, whether you are single or coupled. A credit history and a credit score allow you to access credit more easily and open the door to credit cards, mortgage rates, car financing, and more. If you are building or rebuilding credit from scratch, you may want to consider a secured credit card or a credit-builder product. If you have an existing credit card, use it responsibly. Always pay it off within the grace period to avoid high-interest charges.

Open Your TFSA Account and Start Contributing

The Tax-Free Savings Account (TFSA) is a tax-sheltered investment account designed specifically for Canadian residents. Anyone with a valid Social Insurance Number can contribute to a TFSA. In your 20s, the TFSA should be your primary savings and investing vehicle. The flexibility and tax-saving features of the TFSA cannot be overstated.

It is advisable to make regular contributions to your TFSA, beginning with any amount you can afford. Remember that any amount you withdraw from your TFSA is tax-free. If you begin contributing to your TFSA in your early 20s, the power of compounding will enable your savings to accumulate exponentially by retirement.

Build an Emergency Fund

An emergency fund is a financial safety net that can help you get through challenging times. It is particularly important for women who may experience an interruption to their careers due to caregiving reasons. You should aim to save approximately three to six months of expenses in case of an emergency. An emergency fund should be held in a high-interest savings account to earn better returns than a regular chequing account.

Negotiate Your Salary

One of the most significant financial hurdles women face is the gender pay gap. Research shows that women are far less likely to negotiate their starting salaries than men, which contributes to the wage gap. To begin to tackle the issue, it is essential to negotiate your salary from the outset of your employment. The best way to do so is to research the salary range for your job position and add 10-20% to reach your target salary.

Financial Planning for Women in Their 30s: Navigating the Crossroads of Marriage, Parenthood, and Financial Growth

A woman’s 30s are a period of tremendous financial transition as she navigates big life decisions – marriage, home ownership, parenthood, and career growth – that affect her finances for decades to come. As such, it is essential to be as financially equipped as possible to make informed financial decisions.

Have the Money Conversation with Your Spouse Before Marriage

Financial incompatibility is one of the most common causes of relationship breakdown in Canada. Before you decide to share your lives and finances forever, it is important to have an honest money conversation with your future spouse. The conversation should cover your debts and credit scores, income and financial goals, spousal support obligations, how joint financial responsibilities will be allocated, whether you will maintain separate accounts in addition to a shared one, and more. You may wish to consider employing the services of a financial coach to facilitate the conversation if you are unsure how to have it.

Protect Your Financial Independence in a Relationship

Even within a relationship, it is important for women to maintain financial independence. That means having credit in your own name, having your own TFSA and RRSP accounts, and having the financial literacy to manage them. It also entails understanding joint accounts and having access to them. Having financial independence within a relationship is the surest way to protect your financial security in the long run.

Save for Income Gaps During Career Breaks

If you anticipate taking a career break for parental leave or caregiving reasons, it is important to prepare for the associated financial implications in advance. You should speak to your financial coach about maximizing your RRSP contributions for the years preceding your leave, as you will be able to carry forward unused contribution room. The same goes for setting up automatic contributions to your TFSA, which you can continue making even during your leave. It is also important to speak with your spouse or partner about how you will manage financially during your leave.

Financial Planning for Women in Their 40s and 50s: Catching Up and Building Wealth

A woman in her 40s often finds herself in a difficult financial position due to regrets over financial missteps in her 20s and 30s. Perhaps you continued to accumulate credit card debt with no plan to pay it off or felt financially illiterate and unable to make sound financial decisions. You may feel as if it is too late to turn your financial situation around. However, it is never too late to begin planning for financial independence.

Make Maximum RRSP Contributions in Your 40s and 50s

You are likely to be earning the highest income in your 40s and 50s, which means your RRSP contributions will entitle you to the largest tax deductions of your lifetime. It is advisable to make as many RRSP contributions as possible with this income. If you have not been able to fully utilize previous years’ RRSP contribution room, it is a good time to do so.

Know How Much Pension You Are Likely to Receive in Retirement

Your retirement pension is a significant determinant of your financial security in your golden years. You should know how much you are likely to receive in retirement pensions in order to know how much you need to save for retirement. You can view your Statement of Contributions, which outlines the amounts deducted from your income to contribute to your Canada Pension Plan (CPP), on the CRA My Account portal. Your employment history, including any career interruptions, will determine your pension entitlement.

If you have interrupted your career or worked part-time throughout your working life, you may find that the amount of pension you are entitled to is insufficient. This information will be necessary in determining how much you need to save for retirement, including any additional savings you will need to supplement your pension.

Plan for Financial Independence Following a Divorce

Divorce is more common among women than men, statistically speaking. Furthermore, women who have taken career breaks or who have not worked outside the home are more likely to find themselves in a financially disadvantaged position following a divorce. If you find yourself in this situation, it is imperative that you seek out the services of a financial coach as soon as possible.

We can assist you in inventorying your assets and assessing your income-generating capacity following the divorce. We can also help you navigate spousal support and other entitlements, such as the Canada Survivor’s Pension and the CPP death benefit, and advise you on your options in terms of estate planning. We will help you set aside money in an emergency fund and help you devise a financial independence strategy tailored to your needs.

Financial Confidence and Financial Literacy: The Mindset that Makes Everything Possible

Financial confidence and financial knowledge are not the same thing. Many women feel that financial matters are too complex, too intimidating, or otherwise inappropriate for them and refrain from engaging with them. This mindset severely inhibits their ability to achieve financial independence. At Adeline Financial, we have extensive experience assisting women in developing financial confidence, in addition to financial literacy. We recognize that women often feel financially illiterate due to ingrained cultural attitudes about money and gender.

Our coaching practice is judgement-free and encourages celebration of small victories and incremental steps toward financial independence. By working with us, you obtain not only the financial knowledge to manage your finances but also the financial confidence to do so.

Career Coaching for Women: The Other Side of the Financial Independence Coin

Financial independence for women is closely linked with career advancement. At Adeline Financial, we offer career coaching for women as well as financial coaching. Career coaching for women addresses issues specific to women in male-dominated workplaces, such as imposter syndrome, the wage gap, the difficulty of negotiating salaries, and the specific challenges of returning to work after parental leave or a career break. Our career coaching services can assist women in overcoming obstacles to career progression and maximizing their earning potential.

Career coaching helps women to:

1. Navigate imposter syndrome and understand that they truly belong and are deserving in the workplace
2. Learn to advocate for themselves, including in salary negotiations and discussions of promotions
3. Create work-life balance strategies that take into consideration their unique needs, including those related to familial responsibilities
4. Re-enter the workforce following a parental leave or career break and identify the best strategies for doing so

Financial Independence is a Priority for Canadian Women

Financial independence is a priority for Canadian women because it enables them to lead physically safe, empowered lives and make choices regarding their careers and personal lives without being unduly influenced by financial considerations. At Adeline Financial & Career Coaching, we understand the unique financial challenges facing Canadian women and can assist you in achieving financial independence, at any stage of your life. Our financial coaching services and career coaching services are designed with women’s specific needs in mind.