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By Carol Church

The other evening, my kids and I were having a serious conversation at the dinner table. In fact, I was giving them The Talk.

No, not that one! The “value of compound of interest” talk, of course. This time around, though, I added a little piece I hadn’t before: I told my daughter that truly understanding the importance of compound interest may be even more important for her than it is for my son.

Why? Well, there are some cold, hard facts about women and money that everyone female of any age needs to know. Read on to learn more about some key differences between men and women when it comes to personal finance. There is so much to cover here that we’ve split this post into two parts!

Part 1: Facts about Women and Financial Knowledge, Debt, and Investments

Women have less knowledge and more worry about personal finance topics than men.

Generally speaking, women are somewhat less financially literate than men and less able to answer financial questions correctly, though differences are not large. Women also tend to say that they do not feel confident about financial decisions. They express more anxiety about financial matters as well.

However, women are more willing to admit what they don’t know and to change their behavior.

Women are more likely than men to admit that they do not know the answers to financial questions (in fact, men are often overconfident). This can be seen as a positive, because when it comes to money, “knowing what you don’t know” can be a positive trait. Women also are more likely to change their behavior after being exposed to financial education!

Women are just as likely to pay off their credit card bills.

Women do tend to own more credit cards than men, perhaps because they’re more likely to hold “store cards.” However, overall, women are no more likely to carry credit card debt, although unmarried women with children are more likely to struggle in this area.

Women are no more likely than men to use high-risk financial service.

When it comes to risky services like payday loans, pawnshops, refund anticipation loans, etc there doesn’t seem to be evidence that one gender uses them more than the other.

Women are more risk-averse than men when it comes to investing.

Many studies seem to suggest that when it comes to money, women are more risk-averse than men. They may avoid putting their money anywhere where it seems like there is a risk of losing it (e.g., stocks).

However, some have suggested that this view is too simplistic. Maybe women are not investing due to other barriers, such as a sexist financial industry and/or one that does not meet their needs. It may also be the case that if women had more money, they would take more risks!

Women participate less in the stock market.

This relates to the last point. Women are significantly less likely than men to invest money in the stock market. Even women with substantial wealth may keep all their assets in checking or low-interest savings accounts. This can significantly disadvantage them over time.

But when they do invest, they may be better at it.

Women tend to “buy and hold” in mutual funds (generally a fairly profitable way to play things) rather than trying to trade all the time and/or time the market, which is a male practice that often doesn’t end well. As a result, recent studies find, female investors slightly outperform men.

Are you surprised and a little worried yet? I felt this way after doing the research for this article. Stay tuned for part 2, where we’ll talk about how women’s earnings gap and tendency to take time out of the workplace creates additional financial concerns.

Women and Money, Part 2

Do you think you understand the differences between men and women when it comes to personal finance? Are you confident that the women in your own family are saving and investing adequately for the future? In Part 1 of this series, we went over some surprising facts about women and financial knowledge, debt, and investments. In Part 2, we’ll learn some facts about women and earnings, work, and retirement that may really make you think.