Men, women and everyone in between tend to view money in dramatically different ways. Experts say there are often significant discrepancies in financial habits and priorities between genders, and the exact cause can be hard to determine. Regardless, men tend to show more confidence in managing money and investing. In contrast, women are more likely to abdicate the majority of financial decisions to others. According to a recent report, Future of Retirement by HSBC:
The only area where women assume sole financial control is purchasing groceries and day-to-day purchases.
In most male-female partnerships, men are more likely to make savings, investment, and debt load decisions, as well as decisions for major purchases such as vacations and cars. Findings show that just 27% of women rate their level of financial knowledge as higher than their partners. At the same time, around half of men believe their financial ability is better than their partners.
Although the statistics are clear, what remains is the larger question of why. The answer can be hard to determine since it is likely a mixture of convenience, confidence and knowledge.
One generation to the next
One partial explanation can be traced all the way back to childhood. Parents are often the first (and sometimes only) resource for kids to learn about finances. However, when it comes to what wisdom gets passed along, parents are more likely to emphasize some subjects over others. One survey from giftcards.com even found a discrepancy between what sons and daughters learn about money from their parents:
Parents were likely to teach their daughters “fiscal restraint,” while boys were more likely to be taught about building wealth. For example, 61% of boys received a lesson about credit scores by the time they reached high school, compared with 46% of girls.
Male youths were more likely to receive advice related to credit scores, taxes, and bank accounts. Boys also learned about donating from their parents more often than girls, even though women consistently surpass men in charitable giving.
The three categories that girls were more likely to learn about were saving, budgeting and tracking spending. Parents were also more likely to give their sons a greater sum of money for allowance, chores or special events. Essentially, girls are paid less and taught to budget, while boys are paid more and taught about investing.
No evidence suggests the division of financial knowledge is intentional. The issue is deep-rooted, unconscious, and cyclical. The study found that moms are more likely to teach their daughters about finances, and dads are more likely to teach their sons. In the end, this makes it far more likely that the gendered expectations about finances will continue into the next generation.
To ensure that your kids are learning about finances, regardless of gender, make sure your guidance is family-focused and intentional. To give them a sense of the bigger picture, they’ll need real-world examples! Often, the best place to start is with your own household finances.
Show them what you make...
Show your kids a pay stub and explain what you make versus what you take home. Explain what amount goes to the government, your union, your group insurer, your pension, etc. to start facilitating conversations around larger topics like taxes and insurance types. You can even mimic the feeling of inevitable costs they’ll experience as adults by taking family taxes from allowance payments.
Show them what you owe...
One of the best things you can do is talk to your kids about debt. The problem is that many parents will talk about it in terms of fear - the scary consequences of racking up credit card debt or living above your means. Kids need to learn about the things that can go wrong; however, it’s important they also understand that credit is an essential part of how they’ll use money as an adult. If they learn to fear credit, there could be lasting consequences when they want to get a credit card, buy a car, own a home or even start a business. Overall, kids need to see what it truly takes to manage an income like yours and that living with debt isn’t always a mistake. In reality, credit is a valuable tool when it’s understood.
Show them what things cost...
Share your monthly budget (or your committed and spendable numbers!) with your children and how much of your monthly income goes towards bills and other financial obligations. Then you can give them an idea of how much remains per month for everything else. By showing them the big picture, they’ll start to understand how much the things they want (and beg you to buy) cost in comparison to how much the family can spend.
Let them try...
Kids learn more by doing. Get your kids to help when you pay bills online, walk them through your taxes, or let them be in charge of groceries for one week by giving them cash, a list of must-have items and letting them figure out the rest.
You can also take advantage of their allowance by giving it more direction beyond toys and candy. Instead, try to mimic what real money management will be like for them as adults. Their allowance can expand into general spending (e.g. school lunches, snacks, etc.) and savings (e.g. summer camp, a new bike, etc.). If you go down this path, make sure to write it down so that there are no misunderstandings later on. As they get older, you can add clothing or even extracurriculars to the list.
The bottom line is that your children learn about money based on your relationship with it. If you’re uncomfortable or stressed about it, your kids could absorb that feeling and carry it forward into adulthood. Be mindful of your potential biases’ when it comes to talking with your kids about money or deciding on allowances. Regardless of their gender, be intentional about what you want them to learn, and be open about both the fun and the not so fun parts of managing your finances. The more you involve them, the more confident and competent they will be about their financial capabilities as adults.
Based on a blog post originally published on December 15, 2011, by The Money Finder Blog
Pearl, M. (2019, July). How to Teach Kids About Money, from Toddlers to Teens.
HSBC Holdings. (2018). The Future of Retirement: Bridging the Gap. file:///C:/Users/Test/Downloads/180910-future-of-retirement-bridging-the-gap.pdf
Giftcards.com. (2018). Adolescent Income and Financial Literacy. https://www.giftcards.com/adolescent-income-and-financial-literacy
Lindzon, J. (2019, January). How parents talk about money differently to their sons and daughters. https://www.fastcompany.com/90283344/how-parents-talk-about-money-differently-to-their-sons-and-daughters?fbclid=IwAR3TdBX7E5B60FCHcVy6Ao6ydvWpP1mIhUHHorr9_-AM6C7xF1W6pTOAvMM
Wylie. M. (2017, August). Women are more likely to donate than men. https://www.bizjournals.com/bizwomen/news/latest-news/2017/08/women-more-likely-to-donate-than-men.html
Hopkins, J. (2017, July) Abysmal Financial Literacy Rates For Women Are Hurting Their Retirement Security. https://www.forbes.com/sites/jamiehopkins/2017/07/26/abysmal-financial-literacy-rates-for-women-are-hurting-their-retirement-security/#699b7bff719a