Outdated Views About Women and Money That Are Holding Us Back
Many women have received messages throughout their lives that may cause them to doubt their own ability to handle money. Perhaps you’ve heard that women are bad at math, or that they’re bad at investing — and maybe you’ve internalized some of these views and now hold them to be true. In today’s “Financially Savvy Female” column, we’re chatting with Lisa R. Featherngill, national director of wealth planning at Comerica Bank, about some of the outdated views about women and money that may be holding you back.
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What are some common negative views women hold about themselves in relation to money?
First, let me clarify that I don’t agree that women hold primarily negative views about themselves in relation to money. I have worked with women extensively over the last five years and I have found that they have a lot of confidence when it comes to finances, and are in fact are the primary decision-makers when it comes to money, especially in a majority of younger households. So, I don’t believe that women would say things like, “I’m not good with money.”
However, where some women are less confident (and this is by no means all women), is in the area of investing. So, in areas that are impacted by investing — for example, planning — women may have some negative views about their own capabilities.
Some of the negative views that women might hold include, “I’m not good with investments,” “Planning is boring” or “My spouse will make the decisions for us, so I don’t need to spend time on these issues.”
Why are these views harmful?
Women’s lack of confidence in the area of investing can have some long-term negative effects. I believe that this lack of confidence stems largely from advisors not involving women in the household in investment decisions. Additionally, advisors may not take women’s specific circumstances into account.
Women tend to live longer than men by five years on average, and therefore will most likely be responsible for their finances at some time in their lives. By avoiding these issues, they can create negative long-term outcomes. Additionally, women often have less in retirement than men because they often do not have as many years in the workplace since they are working as caregivers for children and other family members. Additionally, pay disparities between men and women may result in less retirement savings for women.
Second, too much caution and concern can lead women to be overly conservative in investment strategies, especially given their relatively longer lifespans.
Last, women may choose to avoid being involved in financial decisions because they think the topic is boring or because they believe that they aren’t good at dealing with these challenges. This can leave women ill-prepared when they are in the position of having to manage their finances due to the death of a spouse, divorce or other life changes.
What steps can women take to overcome these negative views?
Overall, women feel confident about most financial issues, although less confident on the topic of investing. Even in these cases, there is evidence that women often take proactive steps to ensure that they are educated and prepared, such as working directly with an investment advisor and adhering to their plans. Thus, they are often much better prepared than they think.
According to a 2018 Wells Fargo study, women are more likely to work with an investment advisor (70%) than men (64%). That same study found that women trade 27% less than men, meaning they incur fewer costs. Women seek education/advice more frequently than men (50% versus 40%). Thus, they have very good potential to invest well.
It is clear that better financial education should be a goal for women. We suggest that women:
- Gain knowledge. Find an advisor who you can trust and who will provide information in a way that you learn best — it may be reading or one-on-one [meetings] or videos. Don’t be afraid to ask questions or to ask for an educational session.
- Share what is important to you. According to a Merrill Lynch study, 77% of women view money in terms of what it can do for their families. When you share what is important to you, your advisor can help you achieve those goals rather than focusing on returns.
- Longevity planning is critical. Long-term care and retirement are two areas that require planning, whether the woman is married, has a partner or is single.
- Prepare, especially if the woman is married and has a spouse who handles the finances. Know where critical documents are located, get an overview of the estate plan and get educated. Start the communication early!
By learning more about investing and its long-term impacts, women will be very well prepared for whatever the future brings.
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GOBankingRates wants to empower women to take control of their finances. According to the latest stats, women hold $72 billion in private wealth — but fewer women than men consider themselves to be in “good” or “excellent” financial shape. Women are less likely to be investing and are more likely to have debt, and women are still being paid less than men overall. Our “Financially Savvy Female” column will explore the reasons behind these inequities and provide solutions to change them. We believe financial equality begins with financial literacy, so we’re providing tools and tips for women, by women to take control of their money and help them live a richer life.