Are Men or Women Better At Managing Money?
Are men or women better at managing money? Who fares better when it comes to budgeting, short- and long-term savings, and who spends more in general?
Published: Monday, October 31st 2016
South Africa might be a developing nation, but we’re actually right up there when it comes to gender equality in the workplace. We ranked 17th out of 145 countries on the World Economic Forum’s 2015 Global Gender Gap Index. That’s right friends, we beat the USA (ranked 28th) and the UK (18th). We’re just that progressive.
It would seem that, for the most part, men and women are (almost) on level playing fields in South Africa. So it would be interesting to find out who fares better in the battle of the budget. Are men or women better at managing money?
Women Are Still At a Financial Disadvantage
Before we get into the nitty gritty of stereotypes and holes-in-pockets, let us explain the “almost” we referred to earlier. Despite coming in the top 20 on the 2015 WEF Global Gender Gap Index, SA women still experience the gender gap on their income statements. According to the Workplace Research Programme at the University of Johannesburg, women still earn, on average, between 15 to 17% less than men in this country.
As if that were not disadvantage enough. The latest Old Mutual Savings and Investment Monitor reports 72% of women are, or will be, financially supporting their parents this coming year. The data also reveals 42% of local households are headed by single mothers. Only 12% receive financial support from the fathers of their children.
With that in mind, it’s not surprising that as many as 76% of South African women feel financially insecure. This, even though women have better budgeting and savings habits.
“Women are 8% more likely to stick to their monthly budget than men. They also allocate significantly more money to informal savings vehicles, such as stokvels, than the opposite sex,” says Old Mutual Personal Finance’s Lizl Budhram. She does say that women are, however, 6% less likely to save money in a formal interest-bearing savings vehicle."
But we’re getting ahead of ourselves.
Mr or Mrs Big Spender?
Old Mutual Personal Finance’s Lizl Budhram, says women’s lower rates of financial confidence is linked to their higher levels of financial vulnerability. The Old Mutual Monitor shows that where 45% of men have banked cash savings, this figure is only 39% for women.
Budhram reveals that women may find it reassuring to have surplus cash in their purse, especially in tough times. But, she cautions to be wary of inflation, as it continually eats away at the value of this uninvested money. So, their surplus cash doesn’t actually contribute to personal wealth.
The findings were similar regarding investing for the long term. A significant 53% of men contribute to a pension or provident fund. The proportion of women saving for retirement is lower at only 47% of women. This despite the fact that their life expectancy is four years longer than men (according to research by Statistics SA).
But, women fared better at saving for short-term goals. 22 % of the women surveyed were already putting aside money for Christmas and other year-end expenses (at the time). Only 16% of men were doing the same.
Who would you guess is the bigger spender between men and women? FNB’s Credit Card division collated some of their data to find out. If gender stereotypes were anything to go buy, you’d say it’s the ladies, right? But, surprisingly, it's the men in South Africa who are spending more on credit than women. According to the hard facts, women are more conscientious spenders. They also have a better track record of paying off credit card debt, than men.
FNB Credit Card CEO Chris Labuschagne says: “Data shows that their male counterparts' spending far outweighs women’s and [men] are less responsible when it comes to paying off their cards.”
On average, men spend 32% more than women do on food and retail –averaging at a spend of R470 per month. These figures are surprisingly similar in the online shopping realm, where men outspend women 30%. Men spend, on average, just under R1 000 online, compared to a woman’s average spend of R749.
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The only area where women outspend men is on groceries, which is to be expected. But, the data also interestingly reveals that although women visit grocery stores 35% more than men do, they only spend 15% more than men do when they buy groceries.
“Women, in general, appear to be more responsible when it comes to their finances,” he said adding that men were twice as likely to miss a payment compared to women.
So, What’s The Big Difference?
It’s been speculated that women are just naturally more risk averse than men. Budhram believes that women’s lower tolerance for risk is not a reluctance to invest. It is rather the consequence of a “generally more precarious financial situation”.
The “Gender Differences in the Investment Decision-Making Process” study, published in the Journal of Financial Counselling and Planning, reports that risk aversion is more about access to resources and financial education than it is biology. The study suggests that men are more likely to invest in risky assets if they are unmarried, older and educated; while women are more likely to hold risky assets if they’re employed or hold a higher net worth.