Last week we reviewed the current size of the gender wage gap.  This week we move on to a discussion about differences between men and women and how they view and handle their money. As with any such discussion, we will be talking about results of surveys and generalizing from those statistics. I acknowledge up front that if 56% of women feel a certain way, there are 44% who don’t.   You may be/know a woman who does not fall in the majority category. Regardless, these findings make for some interesting conversations, with our partners as well as with our students. And all of this suggests more financial education could be key.  The question is whether or not gender differences are big enough to warrant some differentiated instruction.

Women and Debt

A recent study led by American University’s Mary Eschelbach Hansen looked at American Consumer Survey Data for men and women who have never been married.  The study was published in the Journal of Consumer Affairs.  It’s key finding was that men were more likely to use credit cards and borrow to buy luxury items, whereas women preferred using debit cards and viewed credit card usage as a “debt-smoothing” instrument.  Women may have been more deeply impacted by the Great Recession than men. In the “implications” section, the study’s authors actually suggest gender specific financial instruction.

ValuePenguin pulled together data on credit card debt in America that has all sorts of interesting statistics and breaks the data down in a number of different ways.  The chart below is the breakdown that is pertinent to this conversation. Notice that male householders carry significantly more credit card debt than females. This corroborates the American University findings.  

Women and Investing

According to a survey by SoFi and Levo (check link for survey particulars), millennial women are great at managing their money.  Millennial women have emergency savings, they monitor their bank accounts, and are aggressive about paying down debt.  What they are NOT doing is investing. Fear seems to be the top reason for not investing, followed by not knowing exactly where to start.  

This fear is unjustified.  A study by Fidelity as well as other research shows that women actually make better investors than men.  If you listen to the behavioral finance podcast from the NextGen summit, you will hear that the explanation has a lot to do with something related to fear: that is, confidence.  Overconfidence, more frequently found among male investors, leads to more active investing/trading and poorer results in the end. Women, who are more cautious with their investments (as they are with debt) stick with the long-term view and do better.  The trick is to get the women who are good at savings over the fear hurdle into the investing game. Sallie Krawcheck, co-founder and CEO of Ellevest, sums the issue up nicely and offers some clear advice for women in this short video.  (A quick YouTube search will pull up more helpful videos featuring Ms. Krawcheck.)

Family Dynamics in Financial Decisions.

If women are capable of managing money and make better investment decisions, why do they shy away from involving themselves in the big family decisions?  UBS Wealth Management release a white paper in April with results that are in line with what has been presented so far.  The study was looking at married women and found that 56% of them let their husbands make all the financial planning and investment decisions.  And 85% left all financial decisions to their husbands, assuming they knew more. While 80% are happy now, the telling statistic is that 80% will end up on their own at some point due to divorce or death of the spouse.  Ask divorcees for advice and they will tell women to get involved from day 1.

And what about joint banking accounts?  Keeping separate banking accounts is growing in popularity among millennials, perhaps because they are getting married later and have well established accounts going into the relationship, and with VenMo and the like, expenses can be split down the middle if desired.  Personally, I know we kept our checking accounts separate for most of our married lives, dividing up responsibility for different household expenses in line with income. We even kept most of the credit cards separate as well.  I think it made it simpler to track expenses and avoid overdrafts, which probably led to fewer money arguments, so I get it.

The Educators’ Role

What do you think?  Do you think financial education should be gender neutral or gender specific? If it is gender neutral (can you imagine ever getting school systems to offer separate personal finance classes?), are there still things we can do as educators to build the confidence of our female students?

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