Women and Men: Thinking Differently about Money
“How is it possible that 90 percent of women don’t know anything about their own money?” – Suze Orman
A few weeks ago, Ramit Sethi at IWillTeachYouToBeRich.com, a well-known personal finance blog, conducted a reader survey about gender and money. The results (served up in a 30-page SlideShare presentation) revealed some stunning differences in how men and women think about money:
Slide 16: Feelings towards money are different:
Confidence = 58% men vs. 44% women
Anxiety = 18% men vs. 33% women
Apprehension = 15% men vs. 26% women
Confusion = 8% men vs. 14% women
Slide 19: Differences in personal finance topics followed:
Investing = 83% men vs. 70% women
Frugality = 53% men vs. 67% women
Those are just two slides that reveal the different views by gender. Meg at The World of Wealth commented on the results with these insights, “I love this survey! As a female, I am not surprised by any of the results really. I realize through my interactions with clients and friends that women think about money very differently than men do (like they tend to worry more about having enough, and they are more likely to feel unsure about their ability to manage money).”
This was the same point that Kay Bell at Don’t Mess with Taxes brought up in a recent BlogHer post about the Top 100 Personal Finance Blogs and the lack of women on the list. In a follow up post on the topic she notes, “Despite my previously stated aversion to stereotyping, I do believe there are gender differences in how women and men approach finances… Even today, some gender-specific societal expectations manage to persist. That’s a topic for a whole ’nother set of blogs. But perhaps some of these antiquated ways are partly behind a trend I’ve noticed. That is, a lot of women take a more “supportive” fiscal approach, focusing on money maintenance, holding on to what they have, instead of taking steps to advance it.”
“We need to get over that right now and get more aggressive when it comes to money — making it, saving it, investing it. The go-for-it approach seems to be more typical of male financial bloggers. Men, at least in my anecdotal observations, are more apt to be risk takers with their money. They embrace the idea that to make more money you sometimes have to take some financial risks with what you’ve got.”
Kelley Keehn, author of The Prosperity Factor concurs. She writes, “Money and finance are definitely issues that go beyond gender and upbringing. There are both men and women who manage money well, and who don’t. A person is a person, not a gender; we are individuals. But generally speaking, when it comes to managing money and investments, there are distinct differences between men and women.”
Women see themselves as less likely to be risk takers than men are. A study found that 31.8% of women labeled themselves conservative investors, compared with 21.7% of men.
Women are less confident in their investing abilities than men. Only 55.7% of women feel confident about their investing abilities versus 64.4% of men.
(Sources: CondeNast and Long Island University)
One final note… Jay MacDonald at Bankrate.com offers this observation:
Women: trained to nurture and seek acceptance, view money as a means to create a lifestyle. Women spend on things that enhance day-to-day living. Theirs is a now-money orientation.
Men: trained to fix and provide, view money as a means to capture and accumulate value. Men don’t spend, they invest. Men don’t want something, they need it. Theirs is a future-money orientation.
How can women become fearless investors? What will it take for women to catch up to the men? Are lesbians any different with money than straight women? Are gay men different than their straight counterparts when it comes to investing? Your thoughts and experiences are welcomed in the comments section below.
September 26th, 2007 at 7:27 am
I think I’m pretty confident about investing, but that’s because I believe in indexing, which is so much safer. I used a mock stock program to do day-trading for my personal finance class…I think the point was that it’s really hard to tell what stocks will rise and fall. Especially in the short-term. I wouldn’t want to do that with real money.
Since I knew it was fake, I got into it and was the top earner (or 2nd, I’m not sure how it ended) in the class. On the whole, though, I think the guys got more “into” it than the girls. But a few of us ladies did quite well.
September 26th, 2007 at 11:46 am
I don’t know whether I am simply living the stereotype, but I have always irrationally worried about having enough money. As far as I’m aware my sister, who is a couple of years younger than me, doesn’t have this issue to the same extent, but she knows very little about investing and aggressive money management.
@Mrs. Micah
I think its interesting that you like index funds because they are safe. I think you are right, but I wonder if men like them for the same reason.
September 26th, 2007 at 4:32 pm
I wonder how self-reporting bias affects these numbers.
For example, this survey does not tell us that more women than men feel more anxiety about money, only that more women than men *admit* to feeling anxiety about money.
I wonder what the difference would be if you could factor out that bias.
September 26th, 2007 at 7:33 pm
plonkee: I can’t speak for all men, but I’ve noticed a few ways men relate to index funds:
1. They don’t know about them / use them at all. This is probably the most common. But then again, most people in general don’t know much about investing.
2. They don’t trust them and believe they can get better returns by paying for a sexier investment (another mutual fund, perhaps, or alternative investments). If you read my blog, you know I mock most of these people.
3. They like index funds because they (we?) know index funds are low-maintenance, relatively safe, and beat the returns of most people who waste their money on fund managers, trading fees, and taxes.
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