In the media, women are commonly depicted as compulsive shoppers prone to frivolous spending. Case in point: Carrie Bradshaw of Sex and the City. More to come on this topic soon!
So which gender-related differences in spending habits are based on stereotype and which are based on fact? If there really are statistical differences, what can we learn from them?
Today there are more women millionaires than ever before. In 2010, 27 percent of millionaires worldwide were women. That number is rising everyday. However, women don't make as much as men... yet. The situation has been improving. In 1979 women made 62 percent as much as men and now they make 82 percent as much. Along with this slow but steady improvement is the fact that more women than men are attending college. Higher education is indicative of higher earnings, so we will likely see this trend continue.
However, it seems women need to earn and save more than their male counterparts. According to a White House study for women, they are likely to live longer and thus run out of money in retirement.
Saving & Spending
It's hard to know who is actually making the decisions when it comes to household finances. According to a Pew Research Study:
Generally, male and female survey respondents are in broad agreement about which gender makes most of the decisions in the realm of domestic life. The lone exception has to do with managing household finances. By a ratio of nearly two-to-one, women say that they (45 percent) rather than their partner (23 percent) manage the money in the household. Men see things differently. Some 37 percent say they manage the money, while just 30% report that their partner mostly handles the household finances.
Some spending stereotypes are supported by research. One study showed that, "women were far more likely to buy something without needing it (36 percent vs. 18 percent), buy something because it's on sale (24 percent vs. 5 percent), shop impulsively (36 percent to 18 percent) and shop to celebrate (31 percent vs. 19 percent)."
When it comes to investing, men tend to focus on higher returns. Women take a more holistic view. Vanguard found that, "women save more [in retirement accounts], trade less, and diversify better. Economists suggest that men tend to overestimate their investing abilities." It seems that women see investing as part of a larger financial picture and have a strategic plan vs. incurring unnecessary risk by chasing high returns.
Both genders can learn from the other's habits. Men might consider a more comprehensive approach to investing. Women might reflect upon how their spending habits affect their other goals. Either way, having a plan in place can help us coordinate your financial goals and strategies. By knowing your predispositions you can make informed choices about your actions and SaveUp!
This post was written by SaveUp's personal finance contributing writer, Catherine Hawley, CFP®.