Writing an article on gender differences and money has the potential to get under people’s skin. Money is a sensitive topic. Making general statements about the sexes and how they tend to handle money seems fraught with peril.
But to challenge stereotypes, we have to be bold enough to name them. I invite you to explore some interesting differences when it comes to how the two genders often approach money. Though some differences may be biologically determined, many of these differences can be attributed to how you were raised, and you do have choices when it comes to your behavior. I’ll share how adopting a more “feminine” perspective has had a significant impact on my own relationship with money, allowing me to help people in a more meaningful way.
Our beliefs about money begin forming at a very young age. Our past is key to understanding our behavior today. When men and women deal with money and investing, their gender differences can have real consequences. There are lessons that both sexes can learn from each other.
Differences Raising Boys vs. Girls
Generally, boys are encouraged to be assertive and competitive. They can demonstrate their masculinity through games. Boys tend to do best when they focus on one thing, and self-esteem, early on, is often linked to winning.
Meanwhile, girls are wired for developing relationships. Their upbringing teaches girls to get along with and take care of others. They tend to be good at reading other people’s feelings and become skilled at collaboration. Girls find ways to see that everyone gets his or her needs met, and interactions are less about winning and losing.
Male Money Trends
These generalized differences manifest in the ways that men and women handle financial decisions. Men tend to view money as a game. Men may see money as a way to keep score, and may also be perceive it as a measure of status and power. In American culture where more is always better, the male perspective seems to inform the adage “he who dies with the most toys wins.”
Female Money Trends
Women, in some cases, may be less interested in simply accumulating money for its own sake but more because of what it can do for them. As nurturers and caregivers, women want to know how wealth can serve them and the needs of those they love. Women may also prioritize passing along values with their money or using money to make the community better. They can be generous givers.
Differences in How Men and Women Invest
It is not surprising that these different gender traits can show up in the ways that men and women invest. Men tend to want the pile to grow (the faster the better!) while women often take a longer view. Their motivation to strengthen community steers them toward socially responsible types of investment funds.
In keeping with their game-based model of money management, more men may follow the market closely, striving to get the best returns, and they may be more willing to take chances in order to score big. According to a 2001 study from the University of California, Berkeley, men trade more frequently and generally don’t do as well as women investors because of overconfidence —the presumption of knowledge with not enough information. (I recently congratulated a male client who said he’d finally given up trying to beat the market: Lesson learned!)
That same study found that women can be more deliberate and take longer to make investment decisions. They are more likely than men to stick with their investments for the long term, be less reactive to short-term changes in the market, and trade less, and consequently realize better investment performance.
The Financial Lessons Men and Women Can Learn From Each Other
Women can be less aggressive than men in various financial arenas — such as salary negotiation. Equal pay remains a glaring area of gender discrepancy. Men tend to focus on doing well and expect to be appropriately compensated for their good performance, both in the financial markets and in the workplace. Approaching money more like a game to be won could benefit women in this instance.
Women, on the other hand, bring their own strengths to money management. Their focus on values and community is vital and lacking in the male-dominated world of finance. Taking the long view and evaluating the purpose of money is a healthy and reality-based way to relate to money and investing.
Adopting this perspective has enabled me to focus on what matters most in my life and serve others in a powerful way. For years I believed the most important thing to consider was how big my pile of money was. Focusing on values and priorities has shifted my thinking. I am now clearer about what my values and priorities are, and can steer my money to what matters most in my life.
My new awareness leads to far more conscious choices, more satisfaction with money, greater appreciation for what I do have, less stress, and more happiness. And if that’s a more feminine perspective on money, I’ll take that any day!