How Your Gender Determines Your Attitude Toward Dollars and Cents

From how we were socialized as children to the way we now define our place in the world, men and women display distinct characteristics when it comes to money matters. In this article on TD Ameritrade’s Fresh Accounts, Diane Bourdo discussed this phenomenon and offered solutions to change the tide.

Bourdo, president of The Humphreys Group, noted that there is nothing inherently different between men and women from a financial capacity standpoint; what’s vastly different are the cultural messages they experience growing up. “Men are overconfident in their money expertise because they have received cultural messages that lead them to believe they know more than they really do,” Bourdo said.

For many women, a lack of confidence often leads to a more cautious approach. Clinical psychologist Alex Murguia pointed out that women are often better than men at recognizing what they don’t know. “This is a huge plus for women, especially when it comes to making complicated retirement income decisions.”

Here are some ways men and women might approach money differently:

1. Women are generally more likely to see money as a means to certain ends, whereas men often see it as an end within itself. “On the whole, women use money as a tool to free up time and purchase things they desire. They often calculate the money they need based on the things they need and what they want to save,” said James Taylor, personal finance adviser and CEO of Let Me Bank. “Men, on the other hand, often have goals that are purely financial in nature—for example, ‘I strive to be earning $120,000 a year by the time I am 30.’ The figure is the goal, rather than what can be done with it.”
2. Many women are more cautious with how they invest. “When investing, women stick to savings accounts and other ‘fixed-income’ products that seem to be safer and much less volatile than gambling with their nest-egg in the stock market,” said Timothy G. Wiedman, D.B.A., PHR emeritus associate professor of Management and Human Resources at Doane University. However, many women’s preference to keep their money in cash greatly affects them as they grow older, explained Eryn Schultz, a co-founder of pHERsonal Finance Day. “Since inflation eats at the value of cash over time and money kept in cash misses out on any market growth, it can have a $500K gap in retirement.”
3. Men “buy” and women “shop.” Men are also less likely to comparison-shop, quicker to click the check-out button while online shopping, and spend significantly more on impulse purchases, Bourdo said. An Experian report found that men had 4.3 percent more debt than women, took out bigger mortgages, and were late on their payments more often. “Yet somehow, men don’t seem to encounter much criticism about their spending habits — no smirks, no snide comments, no finger-wagging, no latte-shaming,” Bourdo said.

But perceptions are starting to shift. Society as a whole is becoming more aware and sensitive to gender differences within financial decision-making, due to to demographic shifts, an emphasis on higher education as it relates to greater earning power, social media, and a pivot toward transparency.

“Men and women alike are interesting, complex, and striving human beings—they are not their balance sheets,” Bourdo said. “Talking about the values behind the numbers is crucial for positive financial outcomes, and harnessing our emotions can be a powerful tool for positive change.”

TD Ameritrade’s Fresh Accounts shares stories uncovering how different people and demographics are approaching money and investing. Their stories examine and explain complex or misunderstood financial topics.