Women and money

Whether we like to admit it or not, women respond very differently to money than men.

In her book, Manage your Money, Live your Dream, financial adviser and author Sunel Veldtman says that biologically women are hardwired to react differently to money.

Veldtman quotes Dr Louann Brizendine from her book, The Female Brain, in which she says that although we live in the modern urban world, we inhabit bodies built to live in the wild.

“Our stress responses were designed to react to physical danger and life-threatening situations. Now couple that stress response with the modern challenges of juggling the demands of home, kids and work without enough support, and we have a situation in which women can perceive a few unpaid bills as a stress that appears to be life-threatening.

“This response impels the female brain to react as though the family were endangered by impending catastrophe. The male brain will not have the same perception unless the threat is of immediate, physical danger.”

Certainly this response plays out in our household every month when we do our monthly budget. If there is not a buffer of extra cash at the end of the month I go into emotional meltdown, while my husband sees it as a perfectly balanced budget.

He has learnt over the years to ignore my emotional outbursts and I have learnt that even if there is no buffer we still manage each month and it is not the end of the world after all.

Veldtman also raises the extremely important point that motherhood makes women inherently financially vulnerable. “Although wage discrepancies between men and women have been declining steadily, the wage gap between mothers and men is still huge.”

Veldtman points out that mothers’ careers tend to play second fiddle when the kids come along, and they pay the price of the perception that they are no longer committed to their careers. They often downscale or exit the workforce for a period of time. “In modern society, this puts mothers at risk. In the case of divorce, these mothers are often landed with the primary responsibility of childcare while rebuilding a career and being left with much less than half of the assets, not to mention only half the future earnings potential of the ex-husband.”

Cinderella Complex
Recently I did some research into women and debt-counselling and found that about 70% of women in debt-counselling are single mothers, which confirms Veldtman’s contention. This is why women need to take an even more active approach to their finances than men.

Unfortunately, even in today’s world, many women still suffer from what Veldtman describes as the Cinderella Complex — where we are waiting for a man on a white horse to come and save us. Sadly this is as far from reality as one can get. As many women have discovered — either as a result of divorce or death of a partner — men are not actually better at managing money than women.

Veldtman says studies in the United States that analysed share-trading between men and women found that women on average outperformed men. This was because of the lower turnover in women’s portfolios. Similar studies have been done of male and female investment clubs, where outperformance was due to women taking more time to make decisions, asking for help and keeping their investments for longer.

Yet in Veldtman’s experience of 15 years managing clients’ money, she is still surprised at how few women know their family’s net worth.

This book aims to redress this situation. Not only does Veldtman offer a very accessible and user-friendly guide to managing your finances, but she also looks at the softer issues of what money means to you and what “money messages” you believe in that are preventing you from taking control.

Veldtman draws on her own experience with money, where even as someone with all the knowledge in the world, she had still left her family finances to her husband.

This book is definitely worth getting if you want to get serious about your money.

Read more news, blogs, tips and Q&As in our Smart Money section. Post questions on the site for independent and researched information.