One of the earliest memories I have of women speaking about finances was an episode of Sex and the City.
Carrie Bradshaw sat with her girlfriends at brunch, dismissing the idea of investing with her iconic quote: “I like my money right where I can see it, hanging in my closet”.
At the time, this struck me as a harmless, funny reflection of the complexities of the finance world, and the intimidation myself and many other women feel at the idea of investing.
Looking back with the knowledge I have now about the gender pay gap and the rise of homelessness among women, attributable largely to financial disadvantage, it’s hard to laugh about how few women feel capable of taking charge of their finances.
Societal expectations and gender norms have long kept women shut out of domains of power, particularly those that grant the greatest financial freedom.
Natasha Janssens, a behavioural money coach at Women with Cents, is dedicated to addressing this inequity by coaching women about their finances and overcoming the “learned helplessness” that leads many women to leave their financial futures in other people’s hands.
“Our upbringing has a lot to do with why more women don’t look to invest their money,” said Janssens.
Men are often socialised to believe that their role is to earn, preserve and grow family wealth, while women are expected to maintain the household, take care of the family, and continuously spend money on their clothes, hair, make-up and home decor in the relentless pursuit of aesthetic perfection.
“In essence, women have been conned into believing two major lies,” explained Janssens.
“The first, that we aren’t good with money and the second, that we have more important things to do than look after our money. Neither could be further from the truth.”
Do men and women have different financial habits?
Stereotypical depictions of women as reckless spenders aside, the evidence about women’s financial habits paints a very different picture.
Research shows that women tend to be considered, cautious investors who take a long-term approach, often earning them greater returns than male investors.
However, women still face significant barriers to taking charge of their finances, including a lack of confidence in their investing skills and competing demands on their time and focus.
Janssens believes a lack of free time is a major barrier to more women investing. Women tend to be the carers of the family who have greater responsibility for raising children or providing unpaid care for ill or elderly loved ones, even when they work as many or more hours than their male counterparts.
“Combine that with the fact that if we aren’t investing or having much exposure to such topics, the world of finance can feel like you are learning to speak another language,” Janssens said.
Women also face greater immediate financial pressures as a result of earning less income, and paying more for similar goods and services as a result of the ‘pink tax’.
While these barriers are very real, women can still choose to take some initial steps to better control their finances.
How to stop saving and start investing
Learning a completely new skill, especially one that entails some level of financial risk, can be intimidating.
For many, the first step is simply shifting your mindset and belief in your ability to become an investor.
“It can all start with deciding to let go of the mental load,” said Janssens.
“Let someone else tackle the laundry and give yourself the time to engage in some investing forums and articles. Change your mantra from ‘I am not good at this’ or ‘I don’t have time’ to ‘I’ve got this’. Just like everything, it is easy when you know how, and the good news is that technology has never made it easier for us to learn and get up to speed.”
Janssens’ golden rules of investing are to never invest money you can’t afford to lose, never invest in something you don’t understand, and to diversify your portfolio rather than putting all your eggs in one basket.
“This can help you reduce the risks associated with picking the right investment or trying to pick the ‘perfect’ time to invest,” she said.
“Investing small amounts regularly, you can gradually grow your wealth with far less risk and have more control over what investment to sell and when.”
She also recommends ensuring you have sufficient emergency savings, or a safety net such as income insurance, so that you don’t need to sell investments when life throws you a curveball.
If you need some time to build up your emergency funds, Janssens said this provides the perfect opportunity to build your knowledge, skills and confidence around investing.
“These days, there is no shortage of resources including Facebook groups, social media accounts, books and podcasts to help you get a grasp on investment terminology and research investment options, as well as apps to help you invest small change and, in doing so, dip your toes into investing without risking much money.”
Cash, shares, property – how to find the right investment strategy for you
“There are quite a few investment strategies and philosophies out there to choose from, and I find the key is actually to do a little bit of everything,” said Janssens.
All investment strategies carry some level of risk, including simply storing your savings in cash. While saving can be ‘safe’ in many ways, it is not as risk-free as many believe.
Savings accounts do little to help grow your wealth over time, and interest rates usually do not keep up with the rising cost of living, meaning that your money can lose value in the long-term.
Many people choose to invest in property, believing that it carries less risk than investing in shares. While this can be true, the downsides to property investments include the far greater upfront costs, the lower diversity of a property portfolio compared to shares, and the fact that most people need to borrow a lot of money in order to afford an investment property.
“The downside of property is also that there are more costs involved with buying, holding and selling the investment and it is not easy to sell the investment quickly if you need the cash,” said Janssens.
On the other hand, shares can fluctuate in value but are much cheaper and easier to purchase, making it possible to reduce your financial risk by purchasing shares in several different companies. Shares also have the benefit of being easier to buy and sell if you need cash unexpectedly.
“You can pick which investment to sell and you can also sell only part of the investment if you need to instead of having to sell the whole lot,” said Janssens.
Getting started on your investment journey
Once they overcome the systemic, financial and sociopolitical barriers to investing, women may actually be the ideal investors.
“Women often don’t give themselves the credit that they deserve – and it’s no surprise, we have been taught to be very self-critical,” said Janssens.
In reality, women are more than capable of understanding investment markets, making great analytical decisions and implementing well thought-out investment plans.
“Not only do women hold their own when it comes to investing, we often make better investors,” said Janssens.
“This is because we naturally tend to be more careful and risk averse. Male investors will often deploy more aggressive strategies, leaving them prone to panic selling during market downturns.
“Women, on the other hand, seem to take on less risk and, as such, we don’t tend to change our investment strategies often or quickly. And let’s not forget how analytical we are – women are great planners and researchers, and these are all skills that are perfect for making investment decisions.”
Even with all the information and resources available to self-train in investing, it’s natural to feel a little apprehensive.
Connecting with dedicated groups and organisations like Women with Cents can be a great way to dip your toe into the world of investing and meet other women on a similar journey to greater financial empowerment.
Women with Cents offers a safe, judgement-free zone where women can share information and advice, as well as one-on-one coaching to help you feel more confident and empowered to make your own financial decisions.
Learning to trust your skills, knowledge and instincts when it comes to managing your money may feel difficult at first, and it is likely that you will make some mistakes along the way.
However, it is well worth it to experience the confidence and empowerment that comes from knowing you are in control of your own financial future, and paving the way for future generations of women and girls to enjoy financial independence and autonomy.