The real issue, experts say, is that many women, despite strides in education and in the workplace, simply aren’t as confident and knowledgeable about financial matters as men. This problem persists even as women handle many of their families’ routine money management duties, like paying bills and making many purchasing decisions.
“Research has shown that women, even professional women with good jobs and successful careers, tend to be less financially literate than men,” said Annamaria Lusardi, an economics professor at Dartmouth College who has studied the issue. “The gap in financial literacy between women and men is large not only among older people, or those 50 and older, but also among young adults, an age group where women are more likely to have a college degree than men.”
That’s similar to what Eleanor Blayney, a financial planner who focuses on middle-age women, said she found when she gave a speech to her fellow alumnae at Mount Holyoke College a few years ago. “At the end, the hands went up, and they were all stuck at the very beginning of my speech,” said Ms. Blayney, who has a new book on the subject, “Women’s Worth: Finding Your Financial Confidence” (Directions). “They were scientists, professors, municipal elected officials. These were women with brains and jobs, and they were just at a loss to even know where to begin.”
Not all women lack financial skills, of course, and many may simply lack time. But studies show that women don’t find money and investing as interesting as men. Women also prefer to learn about money in person or in groups with others in their situation, as opposed to curling up with a book (the jury is out on whether pink covers help).
According to a 2007 study on gender differences by Tahira Hira of Iowa State University and Cäzilia Loibl of Ohio State University, women are still less likely to be socialized in financial matters, and they are more likely than men to find investment decisions stressful, difficult and time consuming. The study also found that it often takes a life event, like getting married, to prompt women to save and invest, whereas men were more likely to start investing gradually.
I evangelize on this subject — likely to a boring degree — because it is essential. Women work hard for their incomes and trying to park their savings safely means wading into an intimidating, unfamiliar sea of acronyms, ADRs, ETFs, NASDAQ, CDOs (oh, them, the most toxic of all!) It all too quickly feels like we’re being pulled by a vicious riptide, whether too-high management fees or “money managers” who speak to us very slowly in words of one syllable and just piss us off.
The last time I sat with an advisor from my investment company, I suggested she look at RIM, which anyone anywhere in that business should know immediately is the (very successful) Canadian company that makes the Blackberry. She did not recognize the name.
Not very confidence inspiring.
I once simply gave up on an investment my ex-husband had made for me, an annuity that withdrew every month from my paycheck to save for it, because I didn’t understand it. I’m not stupid or lazy. The financial advisor who’d sold it to my ex was an arrogant jerk who spoke to me with condescension every time I called to ask “What is this thing?” After I lost a job I did not realize that they simply kept funding the thing using my own savings, in effect cannibalizing my own savings to “save.”
What a scam.
I had stopped opening their envelopes because I knew it was bad (and, yes I was a moron) didn’t want to know how bad. I had lost a ton. Not even enough to buy a cheap new car, but my damn money.
Finally, I closed it, took the hit. Never again!
I survived the last Wall Street meltdown because I was mostly in cash. I have read many personal finance books, even those so highly recommended, and they still make my eyes glaze over. I need to fully understand P/E ratios and a bunch of other metrics before I wade in. I read three business sections every day and I also read many financial/money magazines. It doesn’t, frankly, make me any more eager to risk my money.
Women, for all sorts of reasons, earn less than men; these stats from Time are interesting.
If I make 77 cents to a man’s full dollar, maybe I’m 23 percent less likely to blow it in some lousy investment. I get it, no risk, no reward. Risk remains a real four-letter word to me, and to most women.
African American women make 68 cents to the dollar, and Latinas 58 percent. No wonder we clutch our wallets so tightly.
Look at Goldman Sachs and ask yourself why.