If you’re married to or living with a partner of the opposite sex and you want different things from your money, don’t be surprised. Men and women often don’t take the same approach to managing their cash, but how typical are you?
If you were given £10,000 to invest, what would you do with it? Don’t get too excited, because it’s not going to happen – but is your first thought is to put it in a savings account or to buy shares?
It’s a cliché to say that men are risk-takers in life and women prefer security, but when it comes to money, it does seem to be the case that men are more comfortable with the idea of taking a risk with their cash. This may be partly because women are often more sceptical and/or cautious and prefer to find out exactly how much they could lose before they invest. But that’s not the only money difference between the sexes.
Where the differences lie
Women tend to prefer saving to investing but have lower levels of savings overall. It’s partly because women earn less than men on average, and because paying into savings or investments is often one of the first financial sacrifices that’s made if women give up work to look after children or elderly parents.
Women tend to:
- Save less than men. As well as earning less than men, women can sometimes be less disciplined. Men may be better at setting a goal and doing what they need to reach that goal.
Top tip: If you’re struggling to build up your savings and you have some cash for car/boiler repairs etc, choose a notice account so you’d lose interest if you withdraw money without giving the notice you need (it’s often 30 or 60 days). Or at least pick an account without a cash card so it’s harder to get at your cash.
- Prefer cautious investments. Some women are very comfortable putting their money into stock market-based investments, but many prefer savings accounts or lower risk bonds.
Top tip: There’s nothing wrong with being a cautious investor and how you feel about risk is very personal. If you do some research and then decide it’s not for you, that’s fine, but just make sure you don’t dismiss investing out of hand without finding out more about it. It doesn’t have to be all or nothing, you can start investing small amounts – as much as you feel comfortable losing – until you’ve got used to the idea. You can find out more about investing in our guide Investing – the basics.
- Manage their investments well. When women do actively invest, they tend to generate a higher investment return than men.
Top tip: This is why it’s not a good idea to dismiss investing. When women do invest there’s a fair amount of research (including some carried out by a firm called DigitalLook, which analysed the investment performance of thousands of investment clubs), which shows that women tend to outperform men. That may be because women tend to do more research than men and don’t waste money by buying and selling shares unnecessarily.
- Retire on less than men. There is a wealth of research that shows women tend to retire earlier than men, live longer after retirement and have smaller pension pots than men.
Top tip: It’s depressing to think that women need more money to have the same standard of living in retirement as men but – sadly – it’s the truth. If you’re married or in a relationship you may be able to receive a pension from your partner or husband but if you’re on your own, it’s down to you to make sure you save enough. Learn more about women and pensions in our guide Women and the gender pension gap.
- Prefer not to save in pensions. Some – although not all – women are wary about tying their money up in pensions for the long term. Although it’s definitely not a good idea to lock money away if you need access to it, you shouldn’t dismiss pensions out of hand.
Top tip: The rules state that you can’t access money in a pension fund before you reach your 55th birthday. If that worries you, you can always start saving in an ISA (a cash ISA if you think you’ll need the money in a few years’ time and a stocks and shares ISA if you can leave it for ten years or more) and then transfer it into a pension later on. Find out more in our guide Is it better to save into an ISA or a pension?