Women and the myth about money
A few years ago, Kimberly Palmer, the personal finance columnist for US News & World Report, decided to write a money guide for young women. She planned to give advice on saving, investing and paying off debt because, after all, women are bad with money and need extra help.
This is what the book industry and the media never tire of telling us. Amazon.com has a special "money management for women" category but no equivalent category for men. Major banks like Citigroup and Wachovia have special departments to guide women with their finances. Suze Orman- the doyenne of personal finance - has built a multimillion dollar industry selling books like "Women & Money: Owning the Power to Control Your Destiny." Such titles help women address, as one Amazon.com reviewer put it, "The complicated (and often dysfunctional) relationship women have with personal finance." More books on this shelf: "SHOO, Jimmy Choo! The Modern Girl's Guide to Spending Less and Saving More" and "Does This Make My Assets Look Fat?"
Apparently, we're all a paycheck away from being like Carrie Bradshaw and blowing $40,000 on Manolo Blahniks instead of saving for a down payment on an apartment. We all have an inner Rebecca Bloomwood, the protagonist in the Shopaholic series. We need help.
Not really. After a look at the data, Palmer changed her mind. The Bureau of Labor Statistics reports that single men and women between the ages of 25 and 34 spend at similar levels. The main difference is that single men spend more on transportation, while single women spend more on apparel and services. (Men, incidentally, spend about twice as much on alcohol and $600 more on car purchases.)
As for credit, men and women aren't that different. A higher proportion of women carry some credit card debt compared with men - 76 percent to 67 percent. But men on average carry higher dollar amounts of debt. According to Experian, a global credit group, credit scores - a measure of fiscal responsibility - show nearly no difference between men and women.
When it comes to investing, women might actually be savvier. A 2001 study titled "Boys Will Be Boys: Gender, Overconfidence and Common Stock Investment" analyzed 35,000 households and found that men traded stocks about 50 percent more often than women, driving up their costs and lowering their returns. And women, it appears, are less likely to invest in the types of exotic financial products that caused the Dow to go spiraling. In a nationwide survey of hundreds of investors in March 2009, one in eight men, but only one in every 40 women, had "made riskier investments looking for long-term growth" in the previous week.
On the savings front, women could certainly do better. The Transamerica Center for Retirement estimates that a single woman should have $500,000 by the time she retires. Yet only one in 10 single women who responded to a survey saved more than $100,000, and one-third saved less than $25,000. Only 6 percent have calculated how much they will need to fund their lifestyle once they stop working. But this isn't a female problem; it's an American one: There is little evidence that women save less than men. A survey from TD Ameritrade about financial goals for 2011 found that 68 percent of women said they resolve to save more money in 2011, up from 60 percent in 2009, while 62 percent of men said the same.
With all these facts showing that women are no less financially informed than men, Palmer broke out of the pink ghetto and wrote a gender-neutral personal finance book for twenty- and thirty-somethings called "Generation Earn: The Young Professional's Guide to Spending, Investing and Giving Back." Still, the advice books aimed at women continue to be published and bought. "Does This Make My Assets Look Fat?" is the 30th most-popular book in the Money Management for Women category. SHOO, Jimmy Choo!, a year after its release, is the 54th most-popular book. Why?
The market for money-advice books for women may reflect a confidence gap. Ramit Sethi, 28, a personal-finance blogger and author of "I Will Teach You To Be Rich," surveyed 1,200 of his readers in 2007. A third of them were women. Sethi found that 58 percent of the men, compared with 44 percent of the women, said they felt "confident" about money and finances.
Even if women don't really need extra help with money, more of them think they do. The authors of women-focused financial books capitalize on and reinforce these insecurities and perpetuate stereotypes about women and money with their "girl, get a clue" tone; their covers and titles that imply we are all out-of-control spenders on shoes and clothes; and their tendency to put financial concepts in the language of dieting and weight.
However, it's possible that the bull market for lady financial-advice books won't last forever, as the financial confidence gap appears to be closing. Women in their 20s and 30s are more sure of themselves financially than older Gen-X and Boomer women. FindLaw.com, a legal-affairs Web site, found in a 2009 national survey that married women between ages 18 and 34 were more likely than married men or older women to play a significant role in understanding a couple's finances.
Young women are also optimistic that they'll rebound from this battered economy. Prudential's 2010 study on women's financial experiences and behaviors found that 59 percent of women aged 25 to 34 said they were confident they would recover their market losses, compared with 45 percent overall. How about them assets?
Seligson, a journalist and author, contributes to Slate.