How Men And Women Differ With Money Matters
When you start talking about the differences between the sexes you can find yourself on pretty touchy territory. It is always important to choose your words carefully to avoid being labelled sexist. In reality there are many areas in life where there are vast differences in female and male behavioural patterns and their approach to money is one of them.
Whether you want to accept it or not, women and men face quite different challenges in their lives financially. From the way they spend money, to the way they invest, to the risks that they are prepared to take, the fact is, that men and women differ in their financial approach.
And you know what? This is okay. It is actually to be expected, because essentially, men and women’s brains are wired differently, so it is natural that they make different decisions and choices with regard to their finances.
LET’S TAKE AT LOOK AT SOME OF THE AREAS WHERE WOMEN TAKE A DIFFERENT APPROACH TO MEN:
EARNINGS: Although the gender pay gap is slowly shrinking the fact is that women still generally earn about 16 per cent less than men in Australia. In addition to this women tend to take far more unpaid leave than men and the reason for this is simply that women tend to put family first. Whether it’s to have a baby, look after their children when they are small or care for elderly parents, women seem to prioritise family over earnings. As women what we need to do is embrace this and not look at this as a negative but rather as a positive and as such plan for it just like you save for a holiday. In order to reduce the financial pain of unpaid leave, it is essential that we forecast for it and put money aside regularly when we are working full time, so that we are prepared for those career spaces when they present themselves.
SAVINGS: The truth is, women save less than men and the reason for this is fairly simple. Women tend to put household expenses and finances first which means that their own ‘savings’ is relegated way down the money financial priority list. In an idea world we should be ‘paying ourselves first’ and put away a set sum of money each week to ensure some financial stability and that we have that all-important stash of cash.
BUDGETS: Both men and women can be either really good at budgeting or really bad at it. The main differences between the sexes is not how well or how poorly they budget, but rather the way that they budget in terms of what they see as necessary versus what they see as discretionary items. Essentially, what men and women value the most, tends to differ. This is completely fine, as the key here is not to compare the difference, but to ensure that your budget suits your lifestyle and your income. In an ideal world, 60 per cent of your income should be spent on essentials such as housing, education, healthcare, utilities, education, insurance and transport etc. 20 per cent should go towards savings and then the remaining 20 per cent of the income should go towards discretionary items and this is where men and women’s choices differ.
INVESTMENT: When it comes to investing it is pretty clear that men and women have quite different approaches to investing. These include:
- Men tend to show more interest in investing than women, although younger women are stepping up to the plate and showing more interest than their older counterparts.
- Men tend to know more about investing. This probably comes down to the fact that they show more interest in it so are hence more knowledgeable about it. This pattern will hopefully change with the new generation of millennials coming to the forefront of the financial world.
- Women seek more advice than men. Women are good at asking for help and seeking advice before they make any financial decisions. This can be a great attribute as it means they are doing their homework and avoiding unnecessary risks.
- Women focus more on long-term investments. Women are more likely to look at better long-term investments for their family than possible risky high-level short-term returns.
- Women trade less often. Women are much more likely to buy and hold than men. This is mostly due to their preference for long-term investments.
- Men take more risks: Research has shown that men are more likely to take on more risk for better returns than women who are traditionally more cautious when it comes to investment.
RETIREMENT PLANNING: When it comes to retirement planning men tend to start preparing for it earlier than women. The fact that women are statistically living 4 or more years longer than men and face some further financial hurdles along the way (namely lower pay rates, and time out of the workforce) mean that they need to be more proactive when it comes to retirement planning and saving for that ‘nest egg’. It is vital that women ensure that their superannuation plan is up to date and is the best one for their personal needs and, if possible add to the fund by making voluntary contributions. It is a good idea to seek professional advice to ensure that your investments are appropriate for your stage of life and is reflective of your needs.
The final say
Men are not better with money than women, nor are women better with money than men, but the two certainly have different approaches and this is fundamentally due to the differences that each sex values and sees as important. The truth is, both men and women could each learn something from each other when it comes to financial planning. Women do face a unique set of challenges when it comes to making money and saving money. The great thing is, women increasingly have more power and more choices when it comes to controlling their financial future and they seem to be embracing this change.