Are men better with money than women?
This is a question I’m often asked by people.
One lady even told me that emotions have nothing to do with financial behavior because men are not emotional and yet they are all good with money.
The question I started asking is why this woman (and most women I encounter) would assume that men are better at managing money than women are?
1. Men and Women invest money differently
Men and women approach things differently, so it makes sense that they would approach finances differently.
The Financial Post cites research that shows that women are more risk averse so they make calculated investment decisions, prefer to collaborate and get assistance when it comes to money and financial decisions.
Men lose more money in investments than women but when the market is performing well they make a lot more money because they are more willing to take bigger risks.
Men are also more likely to carry large amounts of debt but unlike women, men believe they have the ability to pay their debts off.
2. Men and Women are socialized differently about finances
Gloria Steinem says, “We’ll never solve the feminization of power until we solve the masculinity of wealth. “
Fact is most of us believe that money has a gender and that gender is male.
According to a study by Jerome Rabow & Michael Newcomb parents have different financial expectations for their male children than they do for their female children – parents tend to involve sons in family finances at an earlier age than they do daughters.
The research also found that parents also had different career expectations for their sons than their daughters, which impacted their “money track”.
Subconsciously we believe our sons are most likely to be millionaires then our daughters.
3. Women see money as immoral, men see it as attractive
Women tend to be more emotional about money and men more pragmatic about money.
Men and women see money differently: men see money as a measure of success and self-worth; women see money as a measure of morality.
Rabow & Newcomb found that women tend to see money as bad and people that make lots of money as immoral and intimidating, which repelled them from money and financial matters in general.
Women also tend to feel guilty about earning more than their parents and being more successful than the rest of their family, which creates a resistance towards dealing with money.
I struggled with guilt over making money for years.
I was terrified of making money because I believed it would corrupt me and also lead me to lose friends.
I often hear my female friends asking:
What does someone do with so much money?
Isn’t it wrong to have that much money when everyone else is starving?
On the other hand, men tend to see money and people that make money as attractive, rational and logical.
Rabow & Newcomb argue that when men have money, they feel lovable, in control, happy and very confident.
Men also have a tendency to envy those that make more money than them.
My male friends are always more than happy to tell me how they made their first million and how they are earning lots and lots of money.
4. It’s all about CONFIDENCE
There's a link between self -esteem and finances.
Women are socialized differently about finances, we’re not as confident about money matters and investments as men are.
Men are more confident in finances, women often take on the role of household finances (day to day finances), whereas men handle long term financial planning in the relationship.
This could also explain why men are more prepared for retirement than women are.
Logically we can assume that being more confident about dealing with money means being more comfortable talking about money and negotiating for a higher salary, which translates into more money for retirement savings, investments and emergency funds.
Recent research by Nasdaq found that the main reason why men tend to have better investment portfolio returns than women is because men are more confident when it comes to money.
Rabow & Newcomb also found that men tend to think they are better at managing finances than women even when their financial habits are similar to women.
This confidence often plays out as overconfidence (this is actually a theory in finance), making men more aggressive investors and thus more likely to earn higher returns on the stock market.
5. Institutional sexism and gender bias
The number 1 thing that holds women back financially and makes us look like we aren’t as good at managing money as men is: institutional sexism.
If you look at the finance industry you’ll quickly see that men earn way more than women and the decision makers are male:
The message that sends to women as they grow up is that the world of finances is a man’s world.
To wealth equal to men women need to have equal pay and access to the same work opportunities (executive level positions) so that we can start earning enough money to save and invest.
As Gloria Steinem says, “There are really not many jobs that actually require a penis or a vagina, and all other occupations should be open to everyone.”
Personally I don’t believe that anybody is born knowing about the world of finances.
But I do believe that we are socialized differently and our financial institutions favor men which has a negative impact on women’s finances, making us believe that men are better at managing money than women.
What do you think?
Are men better with money than women?
Do women see money differently to men?