Who is better with money, men or women? At first blush it may appear to be a ridiculous question but when I meet new clients I always ask about their experience with money growing up. How we were raised, the availability of money and attitudes toward it shape our beliefs beginning at a very young age. Some may bristle at the thought of comparing the sexes but our past is key to understanding our behavior today. There are some gender differences – both innate and cultural – that have real consequences when it comes to how men and women deal with money and investing. And there are lessons that each sex can learn from the other.

Some of the differences are enhanced by the ways that boys and girls are raised. Generally boys are encouraged to be assertive and competitive. They demonstrate their masculinity through games. Boys tend to do best when they focus on one thing. Self-esteem is linked to winning.

Girls are wired for developing relationships. Their upbringing teaches girls to get along with and take care of others. They are good at reading others’ feelings and become skilled at collaboration. Girls find ways to see that everyone gets his or her needs met. Interactions are less about winning and losing.

Keeping Score

These generalized differences manifest in the ways that men and women handle financial decisions. Men tend to view money as a game. Men want to win and the prize is a big pile of money. The green stuff is a way to keep score, and may also be perceived as a measure of status and power.

In our culture where more is always better, the male perspective seems to inform the adage “he who dies with the most toys wins.” I can see my women readers right now rolling their eyes.

What Can Money Do For Me?

By contrast, women aren’t so much interested in simply accumulating money for its own sake but more because of what it can do for them. As nurturers and caregivers, women want to know how wealth can serve them and those they love. Again, they want to make sure everyone’s needs are taken care of. Women also prioritize passing values along with their money, using money to make the community better. They are often generous givers.

It is not surprising that these different gender traits show up in the ways that men and women invest. Men want the “pile” to grow (the faster the better!) Women take a longer view. Their motivation to strengthen community steers them toward socially responsible types of investment funds.

Implications For Investing

In keeping with their game-based model of money management, men follow the news, strive to get the best returns and are willing to take chances on scoring big. In their desire to “beat the market,” men trade more frequently and generally do less well than women investors (Odean and Barber, February 2001.) A man who was in my office last week said he’d finally given up trying to beat the market. I congratulated him on the lesson learned!

Women are more deliberate and take longer to make investment decisions. They are more likely than men to stick with their investments for the long term. They are less reactive to short term changes in the market, trade less and consequently realize better investment performance (same study as cited above.)

The Lessons

What financial lessons might women learn from the male perspective? Women are less aggressive than men in various financial arenas – such as negotiating for salaries. Equal pay remains a glaring area of gender discrepancy (clearly the subject of another article.) Men focus on doing well and expect to be appropriately compensated for their good performance, both in the financial markets and the workplace. Approaching investment more like a game to be won could benefit women.

Women, on the other hand, have yet to realize that they bring special qualities to the world of money. Their focus on values and community is hugely important and largely lacking in the male-dominated world of finance. Taking the long view and evaluating the purpose of money is a healthy and reality-based way to relate to money and investing. So, who is better with money?

I’ll let you decide – and welcome your comments.

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