Women and money

Managing money has traditionally been a male thing, but things are changing and women are playing a greater part in the money management game.

Wednesday, May 17th 2000, 12:00AM

Managing money has traditionally been a male thing. Men, in the past have been the major, or only bread winners, in the family, and they have tended to be the one's who look after it as well.

But things are changing these days and women are playing a greater part in the money management game.

This has come about for a number of reasons

Women have in the past two decades moved en masse from the kitchen to the boardroom, (and many professional women are better at their jobs than their male counterparts).
Many women never marry
Many of those that do marry find their relationships end in divorce.
Finally, it's a fact that women live longer than men.

Despite all these changes there is evidence to suggest that while women are succeeding in the work force they are laggards when it comes to looking after their earnings.

It's like the old saying that an accountant is great at his job and looking after other people's money, but when it comes to his (or her) own affairs they are useless.

Australian author, and senior executive with BT Funds Management, Viv James says money management is a vital skill which women haven't mastered as well as men yet.

"I believe it's an essential tool for all women to be able to manage their money," James says.

Educating women about how to manage their money was the primary motivation behind writing her best-selling book The Woman's Money Book, which is has become the Edmonds Cookbook of investing for women.

She says men and women have many things in common when it comes to money management, however there are a number of important characteristics that differentiate them.

First up, women tend to spend less time in the work force and the time they spend working is often broken by taking maternity leave and bringing up a family. Secondly, they tend to on average earn less than men.

Point two, which exacerbates this trend is that women live longer, on average, nearly a decade more than men.

These points alone put women at a significant disadvantage to men, and that situation is not helped by their attitudes to 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.

The result was that women earned less on their investment as they are more risk adverse, that is they would prefer to put money in safe, low interest cash and bank deposits, rather than using shares and property for growth.

While they may feel comfortable in the knowledge that they are saving for their retirement, the reality is that at the end of the day they will be comfortably poor.

James says there is some evidence that suggest that women's nurturing attitude is a hindrance when it comes to taking on risk when investing.

Also, there is a belief that one needs to earn a lot of money to build wealth. Rather (and this goes for men as well) with a little budgeting advice and cutting back on small, but numerous, items like cappuccinos and muffins that small change can be invested for the long term will grow to be significant.

James says although women are making progress in the equality stakes, and a number of women have broken through the glass ceiling, there is still a need to provide better financial education information to them.

One of the other findings in the Equal Status survey last year was that women felt time poor.

Overall 70 per cent of women respondents felt they were too pushed for time to deal with their finances compared to 56 per cent for men.

"We are time poor these days, but if you do take the time to plan your finances, then it bends to become second nature," she says.

It may come as no surprise to many men (or women) that the biggest financial problem women face is credit cards.

James says it's "staggering" the amount of questions she gets about the fantastic plastic.

"Credit cards are by far and away the biggest issue for women," she says.

"If used wisely they are a terrific short term money management tool," she says. "If they are used poorly they are a disaster because credit has become so freely available."

She says it's OK to use credit cards as a short term finance option, but it is important to pay back the full amount when it is due to avoid paying high interest rates on the outstanding amount.

The other options are to either leave the credit card at home when you go shopping to avoid the temptation, or simple cut it up.

James says women tend to be reluctant to seek advice from professional financial planners.

This may be partly explained by the fact that women, because they have traditionally been working at home or bringing up a family, tend to be out of the business networks.

This reluctance to seek advice is backed up by financial planners in New Zealand.

A number have tried to specifically tackle the women's market, however most have failed.

The reasons are many and varied. However, Trish Lynds from Prosperity Partners in Auckland says women tend to procrastinate and not make decisions.

"Quite a few of them still have the Cinderella complex," she says and they expect their spouse to look after them.

She says one of the best pieces of advice for women is make sure you don't spend all your money on running the household.

Often most of the household expenses are paid for out of the woman's purse, she says.

Money Managers has twice tried to establish firms that are run by women for women, however neither attempt has taken off. One of the reasons is that woman often prefer to deal with men when it comes to financial affairs.

While targeted female financial planning firms have not been successful many planners say that they have women clients, and a number of these are people who have lost their spouse.

James says the women in the survey who have sought advice were more satisfied with the results than the men were.

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 that they aren't able to control. Divorce, retrenchment or the death of a spouse are powerful wake-up calls which actually make more women aware of their financial vulnerability," she says.

There's a message here for men too.

Help your spouse become better educated in managing financial affairs, because it's odds-on that they will have to take control of the finances at some stage.

Men need to think about it this way. Imagine throughout your life you have looked after the family finances and made sure the money isn't just flittered away.

But once you die, your wife will have to take over the finances and before long all that hard-earned and well-managed money is blown away.

Now that's enough to make you turn over in your grave.

The Woman's Money Book