Why men still have more wealth than women
(and what we can do to catch up)

Women’s income is on the rise, but we’re falling behind on financial planning

The latest statistics from Statistics Canada show that women’s income is on the rise, growing 13 percent between 2000 and 2008, compared to only 7 percent for men. But while the wage gender gap is well-documented (with women historically earning less than their male counterparts), what is less often discussed is the gender gap in general wealth and financial planning. And make no mistake, there is a sizable gap there as well - with women again at a disadvantage - according to a study released by HSBC.

But here’s where the difference lies: while many social forces may be to blame for the lower wages women earn in the working world, the blame for the difference between how men and women manage their money falls in large part on women themselves.

The good news? It’s what we ladies are not doing that’s holding us back from securing our financial futures - which means there’s plenty to be done to turn things around.

Here, we’ll look at some of the key reasons why men are overachieving at financial planning - and what women can do to catch up.

1. Men have a plan

One of the key findings in the HSBC study was that while the majority (54 percent) of men had a clear financial plan to guide their financial decisions, only 44 percent of women stated they had a plan for their and their families’ future. Men were also more likely to say they were the ones to take responsibility for financial decisions in the family; 65 percent said they were likely to act alone when it came to making major financial decisions. Yikes!

Step up, sister! A plan is one of the most important steps to achieving key financial goals. If you’re married to a money-smart man, you may already know just how easy it is to let him take the reins. There’s nothing wrong with dividing household tasks in this way, but agreeing to be in the dark about your family’s finances is risky. After all, statistics show that many women outlive their husbands, and that about 40 percent will divorce them; those who’ve ceded all control of their money will be in for a steep and stressful learning curve. Plus, finances are a key part of running a household – pulling your weight in this area is just as important as it is for your husband to pull his in some of the areas traditionally ceded to women, such as cooking, cleaning or spending time with the kids.

2. Men have money confidence

The notion that men take a do-it-yourself approach to managing their finances is no surprise to anyone who’s familiar with the clichéd refrain about the man who refuses to stop and ask for directions. According to the HSBC study, men rated their financial abilities higher than women, and were more confident in trusting their instincts. They were also more likely to do their own calculations and research, while a larger number of women tended to turn to friends and advisors for advice.

Step up, sister! While there’s nothing wrong with getting a good financial advisor (we encourage it!), it’s no substitute for doing your own research and calculations. After all, it’s your money: it’s up to you to attain the knowledge you need to ensure that it is working for you. Allowing anyone - be it your partner, your financial advisor or your friends and family – to assume complete control over your finances is just plain irresponsible. Plus, with all the resources available (not least of all, Golden Girl Finance!), there’s just no excuse for failing to get to know how the world of finance works - unless you happen to think men are genetically suited to buying insurance and picking stocks...we thought not.

3. Men take more risk

Men and women have very different attitudes when it comes to investment risk. While only 25 percent of men consider themselves conservative (or risk averse) investors, nearly 40 percent of women shun higher risk investments such as stocks.

Step up, sister! For young women in particular, this is one gender gap that, ironically, is risky in itself. Unfortunately, while many women focus on guarding their investment principal at all costs, what truly makes investments valuable is growth. The problem is, guaranteed investments such as savings accounts and GICs often don’t even provide enough interest to beat the rate of inflation. This means that as you are saving, the value of your funds is actually shrinking relative to buying power. Throw in some stocks, and your potential for return becomes virtually limitless. Of course, this added risk could mean losses, but by avoiding risk altogether, you write off the potential for great returns. The key is balancing that risk with some guaranteed investments, so you can get the best of both worlds.

The choice is yours

Whether you’re single or attached, money is your other significant other. Whether you have a tumultuous, heartbreaking affair, or live happily ever after is entirely up to you.

 

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