For too long, the myth that women are somehow bad with money has perpetuated our media, marketing, and minds. Advice based on these false assumptions conveys that women are at fault. If they only negotiated harder, took on more risks, and (in short) acted more like a man, then they would succeed.
This view ignores penalties leveraged against women when they attempt the same strategies as men. Rather than being more like a man in a man’s world, we should make the world more equitable in the first place.
To do this, it’s time to call bullshit on four myths about women and money.
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Myth: The Wage Gap Exists Because Women Don’t Ask For More
Women, on average, earned only 80.5 cents for every dollar earned by men in 2017 (women of color fared much worse at 60.8 cents). This persistent pay disparity is the wage gap. Its causes are multi-faceted and the source of much debate.
The wage gap persists regardless of industry, occupation, education, and hours worked. A study from Cornell University controlled for all of these elements and 38% of the gap remains unaccounted for, leading researchers to conclude that discrimination and unconscious bias continue to play a role. Some critics propose an alternate explanation: what if the disparity is because women simply don’t ask to be paid more?
The myth puts the onus on women to negotiate harder, get grittier, and ‘be a man’ in a male-centric workforce. The fact is, women are asking just as much as men, they just aren’t being rewarded for it.
“It’s not because women are asking for less: Women are offered less, and women are more likely to be turned down when they ask,” says Helaine Olen, author of Pound Foolish: Exposing the Dark Side of the Personal Finance Industry in an interview with TheMuse
Contrary to the common belief that women are just not negotiating, the fact is that they do ask; they just don’t get. Women are one quarter less likely to receive a raise, even though they ask for raises with the same frequency. It is critical that we root out unconscious bias and address our promotion and hiring policies to objectively assess performance.
Bonus: Myths about women asking for less also extend to applying for jobs.
You might have heard this oft-repeated stat: men will apply for jobs if they meet 60% of the requirements whereas women will only apply if they meet 100%.
It turns out that this ‘factoid’ came from a confidential, internal report compiled from private interviews with executives at Hewlett-Packard. No scientific study proved the statistic. We should encourage people to stretch themselves when they apply for jobs– but I was still surprised to learn that this ‘fact’ has no statistical backing.
Myth: Women are Worse Investors
A survey conducted by Fidelity on women and money reported that only 9% of women thought women’s portfolios would outperform men’s. In fact, the opposite is true. Women’s portfolios consistently outperform men’s year over year.
One study of 35,000 households showed that women stuck to their investment plans while men traded more. This meant that compared to women, men’s average returns were a full percentage point lower.
Fidelity compared the investing behavior of 8 million retail customers and found that women outperformed men by 40 basis points, or 0.4%. As the study explains, “At first glance this may appear to be a negligible difference, but it can have a significant impact over time.”
Then Why Do Women Invest Less?
Even though they tend to perform better, women still invest less than men. So far, the reasoning goes that it is because they are more risk-averse. The study Gender Differences in the Investment Decision Making Process proposed an alternative explanation: women would invest more if they earned more.
The study found that high-earning women were more likely to put their money in the stock market. As women are less likely than men to be high earners in the first place, it makes sense that they invest less as well.
It’s appalling that 91% of women doubt their own gender’s competence, but not surprising when one takes a look at the financial industry. Only 16% of financial advisors are women despite their proven prowess as investors.
By trumpeting women’s success when they do invest, hopefully we can close the investment gap.
Myth: Women Are Spending Too Much To Save
You don’t have to look far to see a woman in a movie swiping her credit card and glorifying shopping.
In fact, men make compulsive shopping decisions at the same rate as women. Bundle aggregated spending data by gender from the U.S. government, spending transactions from Citi, and third-party services like Venmo. They found that aside from clothes and personal care, men spend more on just about everything else.
This is critical because advice is written based on the misconceptions of the female shopper. Financial articles define women as ‘excessive spenders,’ which then advise women to limit their ‘splurges.’ Meanwhile, articles geared toward men use words like, ‘dare’ to ‘invest’ in order to have ‘power’.
Advice columns direct men to invest while they encourage women to hunt for bargains to save. Women are not the mindless shopping mavens they are made out to be in the media, and they are making big money moves.
Myth: Women Don’t Make The Main Money Decisions
Until as recently as 1974, women had to have a man to cosign for any bank loan. Her income and reputation didn’t matter. The bank considered any man more responsible than a woman for handling a loan.
Among parents with children under 21, 69% of fathers and 52% of mothers are fine with their daughter’s future spouse taking the lead on financial matters. This is a problem as many women will have to manage their own finances at some point in their life.
As women’s life expectancies increase and the rate of divorce for individuals over age 50 continues to climb, more women will find themselves solely responsible for their own finances. – UBS Survey
Money has been considered a man-only domain for far too long. We still see men as the drivers of money decisions, yet women hold more than half of the wealth in the US and make 70-80% of the decisions around consumer purchasing. Now that women can legally have their own credit cards and have rights to marital property (that happened in 1981), they are flexing their own financial muscles.
New research on gender and money is constantly emerging. It is critical to root out the facts from the myth. Misinformation spreads like wildfire, hot takes become taglines, and information we thought we could depend on is actually false.
Despite all of this, we are making headway. Each busted myth is a step forward as more women take the reins of their financial lives. The wage gap shrinks each year as companies implement pay transparency and non-negotiable job offers. With the advent of equal pay, we will hopefully see an increase of female investors. Money is power, so to achieve gender equality there must be wealth equality.