4 Reasons Financial Planning Is Different For Women And Men

It is no hidden fact that men and women think differently in many ways. However, one area that is mostly ignored is their approach to personal finance. Both sexes have a different approach to money; from the things they spend on and the way they save or invest.

Being informed of this difference can help you better understand your financial habits and improve decision making.

Male vs. Female Approach to Savings

Men and women save differently. So it’s complicated to make a clear-cut on who is better at saving. A survey by Fidelity in 2017 showed that women saved a higher percentage of their income compared to men. However, it also found that men save almost double of what women kept aside as emergency funds, and triple to retirement.

The lower savings by women was, however, attributed to the fact that they earn lower income compared to men. Another reason is that women are likely to take time off work due to childbirth and family, and by the time they return, they already lag behind their male counterparts.

So it can be said that while women save a more significant percentage of their income, men save a higher amount due to higher earnings.

Male vs. Female Investing Habits

Women are good at saving but are cautious when investing. They are more inclined to adopt less risky investing strategies and usually stick to more conservative investments.

Men, on the other hand, are ‘financial daredevils’ who love risk. They invest more aggressively and are more knowledgeable about their investments.

The problem is that women don’t see themselves as investors. They enjoy managing their money and are only motivated to invest by the drive to provide and care for others. Though millennial women are more susceptible to investing, they still lag behind their male counterparts. 

Experts attribute the low retirement savings by women to their reluctance to invest.

Male vs. Female Approach To Debts

Another aspect of personal finance that men and women differ is in the handling of debts. Men are more receptive to debt than women, though both genders have different reasons for borrowing. 

Men borrow mostly to purchase luxurious goods or maintain a particular lifestyle they typically can’t afford. Women, on the other hand, borrow to meet basic needs; especially in periods when they have a rough patch. They are however more diligent with repaying their debts compared to men. They work to cut down their expenses to pay off their debts and seek help when necessary.

By contrast, men focus on increasing their income and rarely ask for help until the creditor shows up or their credit score drops. 

Male vs. Female Perception of Financial Goals

The goal of every human is typically to attain financial freedom. However, both genders differ in approach. Men naturally focus on buying a house, car, saving for a vacation, and paying off their credit card debts. Women also have similar goals, but place more importance in paying off their debts before pleasure and assets.

However, men are more inclined to save for their goals. A survey by Mayo showed that men save almost double as women towards their goals. 

But that’s understandable. Life as a woman costs more compared to men. Women have to spend on hair, skincare products, and makeup. They also spend more on clothing and accessories. And since they usually earn less, their goals reflect their income.

Conclusively, it’s hard to say which sex is better in financial planning. Both sexes have their unique strengths and weaknesses and can become better learning from one another.