Authors: Emily Peterson
Source: Real Simple
Career and financial burnout among women is increasing. Here's what it means for a woman's financial trajectory, and how to help prevent it.
Financial burnout among women is more pronounced this year than during the height of the pandemic. Here's what it means for a woman's financial trajectory, and how to help prevent this form of burnout.
The recent pandemic set back the professional and economic progress of women by a generation. A 2022 report from Lean In and McKinsey & Company revealed that women in corporate America are even more burned out now than they were in 2020, and burnout is escalating faster among women than men. Most notably, "One in three women says that they have considered downshifting their career or leaving the workforce this year, compared with one in four who said this a few months into the pandemic," the report stated. "Additionally, four in ten women have considered leaving their company or switching jobs—and high employee turnover in recent months suggests that many of them are following through."
These statistics have significant ramifications for women: among them, financial. Here's a closer look at the price women pay when burnout drives them to leave their careers behind or put their work life on pause, plus tips for preventing (and coping with) professional fatigue and stress.
Financial costs of career burnout
The decision to downshift, step away, or switch jobs is rarely easy and involves considerable thought. For those contemplating such a move, there are direct financial costs to keep in mind, says Lorna Kapusta, head of women investors and customer engagement at Fidelity Investments.
"It can bring with it a host of financial challenges, including several hidden costs that women may not be aware of," says Kapusta. "These include an impact on potential raises and promotions, [retirement] contributions, and potential growth of retirement savings."
Regarding retirement savings and growth, when a woman steps away from work (or downshifts to something less than full-time), she's sacrificing a stream of income (or a portion of that income) and eliminating the retirement contributions from that salary as well as possible employer-provided matching contributions. There's also the loss of potential investment growth for those contributions not being made.
Data also shows that women who step out of the workforce often return to a dramatically reduced salary—anywhere from 15 to 45 percent less, according to Kapusta. "When you come back at that lower salary, then you've got a lower base for everything—from bonuses to retirement contributions," she continues. "You're facing a different salary trajectory over the course of your career."
The gender wealth gap
Let's face it: The wealth gap had women facing an uphill climb financially even before the pandemic. The wealth gap is the difference between men's and women's sum of all financial resources—earnings, investments, retirement savings, and additional assets (such as property)—and is often a result of career choices and trajectories. "When we think about and model the financial life journey of a male versus a female, we observe that women's financial lives are very different," says Surya Kolluri, head of the TIAA Institute, which oversees research on financial security.
Planning for time away
As we know, life is not merely about the accumulation of money. The McKinsey data highlighted issues related to mental health, the emotional toll of being overworked and overburdened, and the need for respite—things you can't put a price on. You can prepare for time away from paid employment by creating a plan that prevents you from falling too far behind financially—something many women are not doing.
A 2021 Fidelity Investments survey found that just one-third of women caregivers calculated at least one of the costs associated with stepping away from work, and few calculated all of them. "It's critical for women to take the time to estimate the full financial impact of the change they're considering," stresses Kapusta.
To help make that task easier, Fidelity introduced a calculator to determine the cost of leaving the workforce and the overall impact it has on one's financial picture. Here are some steps Kapusta recommends women take to help mitigate those impacts:
- Ask your employer about new and improved caregiving benefits. Many companies are offering employees help in dealing with family issues and illness without permanently leaving their job. "They may offer enhanced childcare reimbursement, such as a flexible spending account, flexible schedules, workshares, and family medical leave (FMLA) benefits," says Kapusta. "Before you decide to leave your job, talk to your benefits department; it's in their best interest to help you succeed."
- Consult a professional. Before you make any big change, sit down with a financial professional to talk through ways to achieve the best financial future possible. "Set up a consultation and develop a plan," says Kolluri, adding, "You should make the decision with eyes wide open in terms of financial implications for both the near term and long term.
Addressing burnout before it's too late
If you're further from your breaking point but perhaps can see it on the horizon, find ways to be proactive and protect your well-being. Here are a few tools to stave off burnout:
- Communicate boundaries with your employer and colleagues. "This includes communicating about when you will be online and when you will be offline," says Ishanaa Rambachan, a McKinsey partner and co-author of the Women in the Workplace study. "It's imperative that women have a high degree of self-awareness about when you're entering periods when you need to renew."
In a world where many of us have essentially a 24/7 workday, employees must communicate their boundaries, making clear when they're not available. She urges us to also be aware of our physical energy, mental energy, and emotional well-being.
- "Buy time" to improve daily life balance. It's easy to feel overwhelmed as we navigate our individual work-life balance, according to psychologist Elizabeth Dunn, PhD, chief science officer at Happy Money. "Buying time through investments like daycare or a meal delivery service can pay dividends in terms of life satisfaction," she explains. "Buying time back can help to reduce daily burdens and eliminate some of the pressure we all feel." This doesn't have to mean spending a lot of money, she adds, but simply making small, manageable changes in our lifestyles.
- Build strong habits to support resilience. Learning to relax and find joy in small pleasures can take practice, especially in stressful situations, but Dunn suggests implementing some good daily habits, like replacing negative thoughts with more helpful and balanced ones, or talking back to your anxiety through journaling. Add mindful meditation to your daily or weekly routine by taking a calm moment to observe thoughts and feelings without judgment.
- Get serious about your passions. For many, burnout signals the misalignment of goals and values, says Keisha Blair, author of Holistic Wealth: 36 Life Lessons To Help You Recover From Disruption, Find Your Life Purpose and Achieve Financial Freedom. To remedy this, take time to embrace your passions, including hobbies and activities that enrich you and allow you to re-energize. She suggests taking walks in nature, making time for spiritual self-renewal, and giving yourself space to recover from the daily grind.
Embracing all facets of well-being
If women are to thrive over the long term, not just in fits and starts, it's imperative we prioritize all facets of our health and well-being—financial, emotional, relational, and mental—like we tend to our physical health, says Lisa Hennessey, chief people officer for Happy Money. Taking this approach is particularly important for those women coming after us, to help show them the way.
"It really pays to lead with future generations in mind," explains Hennessey. "I try to set an example for girls and women who will become leaders someday. As a mom of two girls, I remind myself to show them what work-life harmony really looks like, how to take care of themselves, and hold boundaries, and how they can lean into their dreams and talents—even when it feels intimidating or uncomfortable. I want them to know that they can do hard things and show up as their full selves."
This article was written by Emily Peterson from Real Simple and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to email@example.com.