Much of the research around how and why women feel the way they do about money management isn’t surprising to us women. According to statistics, 81% of women said they’ve personally been a victim of negative stereotypes – including about their investing abilities. And while this is extremely sad, it’s not surprising to most. I, too, have experienced this firsthand on more occasions than I care to remember, even though I am a finance professional with the experience and qualifications to back it up.
I remember how every conversation was directed at my husband when I was talking to banks and brokers about obtaining a mortgage. I’d ask a question, and the broker or advisor would proceed to answer it looking at my husband as if he’d asked. As a regional head of finance who was responsible for billions of dollars in company revenues, you’d think I’d be taken seriously – and that’s notwithstanding the fact that the mortgage application was 100% based on my salary and would be my liability! It felt like my gender was overshadowing my financial credentials and my experience. Of course, as a woman, I can’t possibly be the decision-maker or capable of understanding a complex mortgage agreement, right? Wrong.
So much of that bias is unconscious, and it’s present in both men and women. We, as women, often display this bias against ourselves. We believe the stereotype that women are simply not good at managing money – that we cannot control our spending and we’re not good at investing. This idea is widespread and spread across cultures, geographies, and generations. When it comes to money, there is often a canyon of space between our mindsets and money-belief systems. But why is it this way? Thankfully, there is much research on this topic and I’m going to discuss some key facts here.
How Are Men and Women Different?
Women are socialised to save money, keep it safe, and not be greedy. Our male counterparts, on the other hand, are socialised to invest, seek out ways to earn as much as possible, and be proud of their financial achievements. For men, earning vast amounts of money is seen as powerful and impressive. Because of this, women tend to hold 71% of their assets in cash and shy away from sharing what they earn or have. Men, on the other hand, hold 60% of their assets in cash and are more likely to boast about promotions and what they earn.
What I hadn’t considered before was our tendency to use our money to benefit everyone except ourselves. Studies have shown women use money to create a lifestyle in the present. We do that by buying the groceries, making 70% of travel decisions, and organising the day-to-day lives of our families. This is a different spending perspective from the stereotypical one portrayed by the media, where women spend all their money shopping and even need to be given tips to stop or reduce.
On the other hand, we are less likely to plan for retirement, buy life insurance, or be involved in arranging mortgages. In contrast, men use money to create a secure future. They take on the role of decision-maker in significant and long-term financial decisions. Ironically, we women tend to live longer than men and, yet, we are leaving our retirement security in the hands of people we are likely to outlive.
Why Do Women Feel Less Financially Confident?
Money is genderless, and it’s as much of a tool for women as it is for men. So why do we feel so differently about it? This is where it gets particularly frustrating. The divide in money isn’t just about gender pay gaps, there is also a worrying gap in how men and women are spoken to about money. Men are taught the benefits of investing, blockchain, and NFTs, while women are told to stop drinking artisanal coffee so they can save for a pair of designer shoes.
A study carried out by Starling Bank in 2018 found that 90% of articles targeted at females focus on small ways to save money. 71% encourage seeking out vouchers, discounts, and coupons to save money. 65% define women as excessive spenders, urging us to limit, restrict, and better control our ‘splurges’. Our male counterparts, on the other hand, are targeted with articles about the importance of making big investments, how to mitigate investment risks, and how money can enhance one’s status as a man. Furthermore, 50% focused on how to protect themselves from future harm, including financial harm from divorce. Is it any wonder that arguments over money are consistently reported as the number one cause of divorce?
Why Is It Good to Get More Money into Our Hands?
As women, we use our money to help others. Women invest 90% of their income back into their families, while men only reinvest 44%. When I first came across this, it surprised me, but when I sat back and thought about it, it all made sense. When my mother spoke to me about money, it’s clear now that she assumed my income would be used to pay for my family’s needs. She also urged me to always keep enough aside just in case – which I did, but I too had unconsciously internalised her assumption. My income went back to my family and, for years, I didn’t invest or think long-term either. It was a real wake-up call.
Despite how the media portrays us, we are more financially responsible than men. When we do invest, we are more likely to invest long-term, we are more patient, and we achieve better returns. Studies show women are more likely to invest in ESG and sustainability, so we use our money to invest responsibly and do good for the planet. We use our money to help our families and our communities, so communities thrive when women make more financial decisions. We currently control over $31.8 trillion in worldwide spending – imagine the positive change we can create with that level of wealth if we felt empowered to use it in line with our values and help others?
What Can You Do to Feel More Financially Confident?
Put yourself on the path to financial wellness by taking small actions that you can do now. What’s most important when you begin is clarity. It means knowing how much money you have, and then creating a plan for where you want your money to go. Ensure the cash flow plan is in line with your values, not what others or the media tell you it should be. Set financial goals that are true to you and then build your budget to achieve those goals. Make peace with your money situation and forgive any past mistakes – every human makes money mistakes.
If you’d like to know more about financial wellness, get your free copy of my Conscious Finance Coaching Financial Wellness Checklist here.
