Women and Money: How You Can Close the Financial Gender Gap

In my career as a financial advisor, I have spoken with thousands of men and women about their finances. After a while, I saw patterns emerge in the differences between the sexes with regards to money -- how they viewed money, how they managed money, and how they wanted to learn about money.

I thought I might be making too many generalizations based on my experiences, but then I came across a recent study on the gender gap in financial literacy that supports my findings.

Widening Gender Gap in Financial Literacy

According to a recent study from Financial Finesse, a company that provides workplace financial wellness services, women are falling behind men in several areas of financial planning. This gap is noticeably growing with regards to paying off debt, arming an emergency fund with a few months' living expenses, and having basic stock, bond, and mutual fund knowledge.

On a positive note, the study found little to no gender gap with respect to longer-term planning. Women participate in workplace retirement plans about as much as men, and also report roughly equal engagement with long-term estate planning.

It's the nitty-gritty of financial management where women are coming up short. To better understand why, here's what I discovered that women want in terms of their personal finances.

• Women want peace of mind: For women, financial peace of mind is the ultimate personal finance goal. Women want a secure and sound financial future for themselves and their families, and they view their investments as a way to support and protect their loved ones. Surveys -- and my personal experiences as a financial advisor -- show men are typically more interested in wealth accumulation.

• Women want time to research their options: Women are deliberate decision-makers and take their time doing research. Women prefer gathering information from a vast group of experts before taking action and initiating a plan. Women also prefer thinking through and planning for "devil's advocate" and "what if" scenarios to help protect them against the unexpected.

• Women want an ally, not a bossy know-it-all: Education, collaboration, and patience are critically important to women. If a woman feels condescended to or the environment does not foster question-asking, then she'll disengage from the dialogue. A woman needs to feel the financial educator is an empowering ally, not a rival. Whereas men typically want the facts and information to make investing decisions on their own, women prefer a collaborative, nurturing environment.

Get More Engaged with Your Finances

The good news is women are seeking financial information and education at rapid rates -- roughly twice the rate of men, according to Financial Finesse's findings. That's a trend worth continuing, particularly in light of the unique financial challenges women face. (See "The $849,000 Penalty for Being Born Female" for more on that.)

Here's how you can take matters into your own hands.

• Educate yourself. Look for an investing class at a local community center or college. Many of them are free or very low cost. Join an investment club. Ask your daughter, sister, mother, or friend to attend with you. Have fun with it.
• Make the most of the savings tools available to you at your workplace or if you are self-employed.
• If your spouse or partner handles the money, call a family finance meeting. Ask that individual to teach you what s/he does. Find out how the budget looks, bills are paid, household cash is managed, and investments are monitored. After you understand, take your turn. You don't have to do it forever, but you should know how. You may even enjoy it and improve your family's finances.
• If you choose to get professional financial help, interview prospective financial advisors. If the advisor won't take the time to listen, get to know your needs, and explain concepts to you clearly and simply, then feel free to walk out and don't look back. Find an advisor who speaks your language at your pace.

Gallery: The $849,000 Penalty for Being Born Female

For more on this topic, see:

• What Wealthy Women Want ... From Their Financial Advisers