Women & investment
Do women have different attitudes to money and to investing? Should they? Vivienne James, the author of The Woman's Money Book had some interesting answers...
Managing money has traditionally been a male thing. In the past, men were the major, or only breadwinners, and they have tended to look after the money. Now women are playing a greater part in the money management game. In the past two decades women have moved en masse from the kitchen to the executive suite. Many women never marry. Many who do, find their relationships end in divorce. And women live longer than men.
Despite these changes, the evidence suggests that while women are succeeding in the workforce they lag their male counterparts when it comes to looking after their earnings. Viv James says money management is a vital skill, which many women have yet to master. "It's essential for all women to be able to manage their money." Educating women about how to manage their money was the primary motivation behind writing the best-selling Woman's Money Book.
First launched in Australia in 1994, it has now become the Edmond's Cookbook of investing for women. Viv says men and women have many things in common when it comes to money management. However there are naturally some important characteristics that differentiate them. First, women tend to spend less time in the workforce and the time they spend working is often interrupted by bringing up the family. They tend, on average, to earn less than men.
Exacerbating these points is the fact that women live longer - on average nearly a decade more than men. These factors can make managing money more challenging for women. It's a situation that is often not helped by women's own attitudes to investing in money management. The Women's Economic Status report of Australian and New Zealand women compared men and women who had the same work history and incomes and looked at how they invested their money.
It showed that women earned less on their investments, as they were more risk averse. They tended to put money in safe, low-interest cash and bank deposits, rather than using shares and property for growth. One of the other findings in the Equal Status survey was that 70% of women respondents felt they were too pushed for time to deal with their finances. Only 56% of men felt this way.
It will come as no surprise that the biggest financial problem women face is credit cards. "Credit cards are by far and away the biggest issue for women," Mrs James says. "If used wisely they are a terrific short-term money management tool. Used poorly they are a disaster." It is okay to use credit cards as a short-term finance option, says Mrs James, but it is important to pay back the full amount when it is due to avoid paying high interest rates on the outstanding amount.
Mrs James says women tend to be reluctant to seek advice from professional financial planners. A number of financial planners have tried specifically to tackle the women's market but most have failed. The reasons are many and varied. "Quite a few women still have the Cinderella complex," she says "and they still expect their spouse to look after them." One of the best pieces of advice for women, she says, is make sure you don't spend all your money on running the household. It seems that, in the majority of cases, most of the household expenses are paid for out of the woman's purse.
Overall there is a greater need for women to learn more about personal finance. "Women are still the gender with the greatest vulnerability to a shift in financial circumstances caused by life experiences they are not able to control. Divorce, retrenchment or the death of a spouse are powerful wake-up calls which make women painfully aware of their financial vulnerability," she says.