Stereotypes Ring True
No two women are exactly alike, but when it comes to money, the traditional stereotypes often ring true. Women have a reputation for saving less and being more risk-averse than their male counterparts. On the other hand, men are known for jumping into purchases or investments without educating themselves first, and for focusing on quantity rather than quality.
“Men and women are differently motivated around financial learning, due to their different psychologies, experiences and emotions with money,” says Barbara Nusbaum, a New York-based financial psychologist. “But there is actually a great deal they can learn from each other regarding financial behaviors.”
The Optimist vs. The Realist
The stereotype: Men take more risks associated with finances — whether it’s investing in the latest startup or applying for jobs for which they aren’t necessarily qualified — and typically assume that bad things, such as negative investment returns, disability or premature death, won’t happen to them. Women, on the other hand, tend to base financial decisions on “the worst-case scenario,” says Alexey Bulankov, certified financial planner with McCarthy Asset Management in San Francisco. “Many affluent women I’ve advised want to talk about avoiding ‘becoming a bag-lady,’ whereas men prefer to close their eyes to possible catastrophic outcomes and take their chances.”
The lesson for men: Men can learn to “worry a little more,” Nusbaum says. “Men tend to overestimate their abilities around planning and investing, thus leading to overly risky investments. They could learn from women that it’s normal and unavoidable to feel and acknowledge anxiety around money. Knowing your anxiety can create more realistic plans.”
The lesson for women: Find a balance between optimism and worrying, says Kimberly Bridges, vice president and senior financial planner at the Kansas City office of BMO Private Bank. Learning to take appropriate levels of risk (investing in stocks, for example, versus a money market fund with a return that won’t even match inflation) can improve women’s chances of financial success.
The Hunter vs. The Grazer
The stereotype: According to research from the Wharton School of Business, when men shop, they simply enter a store, find the item they need and leave. Women are more likely to enjoy shopping and will spend time looking, comparing and exploring all the options before making a purchase.
The lesson for men: Men could take a lesson from women by spending more time talking to salespeople and exploring the store, as that often leads to better deals and even better products. “Women are more concerned with sales and discounts ?while men are focused on just getting what they need no matter the cost,” says Leslie Tayne, New York-based financial attorney and debt specialist.
The lesson for women: Spending so much time shopping can lead to impulse shopping, rather than simply buying what you came to buy, Tayne says. There’s a benefit to making a list and staying focused so you won’t get distracted and overspend.
The Spender vs. The Saver
The stereotype: Because “men are socialized from very early on to focus on money accumulation,” they save more than women and start saving earlier, Nusbaum says. Women, in contrast, are more likely to link spending with their emotions: “A woman might have a bad day or week at work, or ?just experience a bad breakup and think that in order to feel better, they? need to go buy a pair of shoes or a couple of outfits,” says Ja’Net Adams, a financial leadership consultant and speaker.
The lesson for men: While saving is crucial for financial security, it can be important to balance saving for the future with living well today. Men may experience more satisfaction by becoming more involved in family spending decisions instead of focusing solely on saving.
The lesson for women: Women need to start focusing on money at a younger age, Nusbaum says. “Don’t lose out on the benefits of saving, investing or at minimum, developing a financial mindset and skills early. Women need to catch up and correct for the historical biases and prohibitions against women earning and managing money.”
The Player vs. The Preparer
The stereotype: Twice as many men say they “enjoy” the sport of investing compared to women, according to research from Prudential. When it comes to building a nest egg and making their money grow, men are likely to trust their own instincts and jump right in, even if it means they’ll make mistakes. In contrast, more women spend endless amounts of time planning, preparing and “training” to join the game.
The lesson for men: Rather than assuming they have all the answers, men could learn from women to ask for advice before making financial moves. “Men's self-confidence that they are making the right moves can lead them to be too aggressive chasing performance,” says Mela Garber, tax partner at New York accounting firm Anchin, Block & Anchin. “They could learn from women to spend the same amount of time to evaluate risk in making investments as considering rewards.
The lesson for women: Women should get into the game and try to enjoy it more. Take a lesson from men’s willingness to make mistakes and learn from them: According to a Charles Schwab survey, 59 percent of men say they’ve learned more from financial mistakes than successes. Overcome your fear by identifying the amount of money you could lose, without losing any sleep, and invest that to get your feet wet.
The Caregiver vs. The Caretaker
The stereotype: Men are interested in the quantitative value of money — accumulating more money for the sake of more money — and measuring their worth in the same way, while women are interested in qualitative value, including their mothering and caregiving responsibilities or having enough money to feel secure, comfortable and unafraid. For instance, men “may splurge on large houses or expensive cars” as a “declaration to the world that they are successful,” Garber says. But women will spend money on the house or car that makes their family feel safe, or the family vacation that will give their children a positive, happy experience.
The lesson for men: Men can learn from women that their personal value doesn’t have to be about money, and that the value of money is in the good things it can provide for the people you love.
Lesson for women: Women need to “get specific about numbers and make specific action plans, while holding onto your bigger picture and your security,” Nusbaum says. That may mean demanding the salary you’re worth rather than settling for the one that’s good enough, or setting specific goals for retirement savings and developing a strategic plan to get there.