That’s right: this lady who loves words and stories often enjoys nothing more than reconciling her end-of-the-month budget and making big picture financial plans. And, apparently, this fact isn’t just odd for an English-history gal like me, it’s odd for a woman in general.
In this month’s issue of Real Simple, Geraldine Sealey writes about a phenomenon called “the female financial paradox,” in which women tend to focus on micro financial choices like pinching pennies, clipping coupons, and paying bills, but ignore the macro ones, lagging behind men “in actions crucial to building wealth and security, such as investing and having a long-term money plan.” According to two different surveys, 90% of women are their family’s primary bill-payer and shopper, but 60% of us rate our investing and financial planning skills as below average.
According to the experts Sealey interviewed, the female financial paradox rests on four main elements:
- “Women tend to be insecure about the subject of money,” and our insecurity, compounded (see what I did there?) by bad experiences with financial professionals, leads us to remain less informed than we need to be;
- Following in the footsteps of generations of American women, “we focus on scrimping instead of investing,” ignoring the fact that a good investment is worth far money in the long run than a good deal on Pampers or a 2-for-1 coupon on ketchup;
- “[W]e rely too heavily on others for financial know-how” – often our husbands or partners, which is especially problematic when a marriage or partnership ends; and
- “[W]e’re not always adept at translating abstract figures into concrete goals,” focusing too much on big picture aspirations rather than the specifics of how to get there.
In our household, I am the coupon-clipper and the one who chooses the funds for our 401(k)s and Roth IRAs. I love a good bargain at Kroger, but I also like to understand how much of our income we should be setting aside for retirement investing and when it makes sense to rent vs. buy. And I think both sides of my financial personality have to do with my compulsion to control the world around me. Especially in these years with little kids and constant colds and unpredictable sleep, I like knowing how much money we have in the bank, how much we spend each month, how much we’ll need to pay for college, and how much we’ll want to have when we retire – you know, control the controllables.
But Sealey’s article reminded me that my passion for personal finance isn’t one that’s shared by a lot of people – at least, it seems, not by a lot of women. But, especially since financial literacy is not part of the curriculum in many schools, understanding not just how to save our pennies, but also how to manage our pounds is an essential skill that we all need to have.
Sealey closes with four simple strategies we can all take to help shore up our financial knowledge: work with a financial planner (I’ve done this and found it helpful); read a helpful book (I first got hooked on personal finance through David Bach’s Smart Women Finish Rich; it’s now over ten years old, but the message hasn’t changed); go online (Dave Ramsey has some great, simple materials; I also like The Simple Dollar and Get Rich Slowly); and take a class.
Especially in this volatile economic climate, don’t we all owe it to ourselves to understand where our money comes from, where it goes, and how we can use it to reach our dreams?
Who is the “money person” in your household? What gives you comfort when life feels unpredictable?