How Men and Women Approach Money Differently

Recently, I delved into research about how women and men differ when it comes to money. I learned about differences in how each gender tends to control money, how women feel they are treated in conversations about money, and, of course, how financial compensation varies between the sexes.  

What I found most interesting in my research, though, was an explanation of how women and men differ when it comes to thinking about money in an article by Ruthie Ackerman found in the April 2012 issue of Investment News. Men tend to view money as a never-ending stream that is perpetually flowing and will always be there for them when they need it — a possible explanation for why men seem willing to take on more risks financially. Women, on the other hand, view money as a pond (without tributaries), so they feel that they must keep a careful eye on it, and worry about it drying up.  

Is this a generalization? Absolutely — not every woman is afraid of her money “pond” evaporating, and some men are worried about becoming penniless. This generalization did, however,  enlighten me about the cause of gender differences in approaches to money — including the root of many arguments between the sexes about money —  and further cemented my affinity for working with women.

I believe this flowing stream/pond analogy is a result of our biology: Back when humans were cave dwellers, men survived because of their ability to go out in the world and hunt down an animal for food. This was risky, of course; they could have died in the process of prehistoric “grocery shopping.” Women’s skills, on the other hand, were honed back at the cave. Women were gatherers and were skilled at foraging and preserving the food that they found. If women couldn’t find any food sources and if men didn’t return home from the hunt, they were toast — unless they had frugally saved the food they had!

The biggest takeaway is that even as women’s reach in the workforce and wealth continues to expand, we tend to have an inherent, if not illogical fear of running out of money. I think most of us can relate to the “bag lady” concern. Deep down, we may have a chronic fear of not having enough, losing what we have, and outliving our money.

So how can you work with these deep-seated fears and still continue to build your wealth? There are actions you can take once you are aware of and make peace with these fears.

  • It’s important to work with a financial planner or advisor who listens to and empathizes with any fears you may have. You can also prioritize building your emergency reserves to ensure your financial self-care.
  • If you are partnered or married, you can be more involved in your financial decision making, especially when it comes to planning to have adequate life insurance in place.
  • If you are close to retirement, you can explore lifetime income strategies, also known as annuities*, and ways to maximize your Social Security benefit.
  • In general, you can take stock of your personal finances and ask yourself: What worries me and what can I do to alleviate potential problems?

Finally, be kind to yourself when assessing your financial situation. My generation — Generation X — is really the first generation where most women took on full-time careers.  Women are still relatively new to the workforce, and have come very far in a very short amount of time. It makes perfect sense that we are still learning about money and how to juggle all of our other responsibilities at the same time. We can’t do it all or know it all, and it’s important to know when we need to outsource.

If you want to chat more about this topic — or whatever other financial topic keeps you awake at night — I’d love to hear from you.

*If exploring annuities, please be very careful who advises you. I recommend working with a Certified Financial Planner who is fee-only and won’t receive a commission from the purchase of an annuity, and/or using a low-fee annuity from a reputable company. Do your homework or get help!

Addie McHale is a member of the DailyWorth Connect Program. Read more about the program here.