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Studies: Gender may influence how well you manage money

by Peter Andrew

Decades ago, this writer was marketing director of a small start-up company that needed to raise its profile both cheaply and in a hurry. Its PR people came up with a great idea: Devise some carefully drafted questions that are likely to provoke controversial responses, and have them included in an omnibus survey by a credible polling organization. Once the data are back, and a suitably sensationalist press release is issued, the mainstream media are going to give the company acres and hours of free coverage. It worked -- really well. Of course, there's no chance of there being the slimmest link between that anecdote and this press release headline, dated Oct. 28: "BMO Harris Bank Survey Shows Better Credit Card Behavior Among Men Than Women."

Women and credit cards

The key findings -- the ones used to justify that headline -- of the survey, conducted online in July using a sample of 1,004 Americans by credible polling organization Pollara, were:

  1. Ten percent of women say they usually pay off their plastic in full every month, but sometimes have to carry forward a balance. That compares with 14 percent of men who say they're in the same boat.
  2. More women than men claim they try to pay down their credit card in full every month, but end up having to carry a balance (22 percent versus 16 percent).
  3. Thirty-five percent of women say they are concerned about paying down their credit card debt. Only 22 percent of men were similarly bothered.
  4. Eighteen percent of men and 19 percent of women reported they always had card debt.

The first and last points are close to meaningless, given that, in the words of the press release, "The margin of error for a probability sample of this size is ± 3.1 percent, 19 times out of 20." The explanation for the second one may simply be that women set themselves more challenging goals than men, and so fail to achieve them more frequently. You may think that interpretation's borne out when you look more closely at the remaining point: that 35 percent of women say they're concerned about paying down their credit card debt. Women were more concerned than men about an entire range of scenarios presented to them, including paying bills on time, keeping up with their mortgages, maintaining a good credit score and having enough savings for their kids' education, for retirement and for future purchases. Of course, it may be that women are especially concerned about those because they're failing to achieve their objectives, but it's at least as likely they're just more conscientious than men.

Women and money

Certainly, some believe women are, if anything, better money managers than men. Last year, Big-Three credit bureau Experian interrogated its huge database -- having first stripped out personal identifiers to avoid privacy issues -- to compare the two sexes' money-management outcomes. And its conclusion was that "women are taking steps to manage their finances better than men," to quote Michele Raneri, the company's vice president of analytics.

The Experian study found that women's average VantageScore credit scores were only one point higher than men's, probably a real statistical difference, given the size of the sample, but neither here nor there in the context of this discussion. But it also revealed that men, compared with women:

  • Pay their mortgages late 7 percent more frequently.
  • Have higher total debt levels by 4.3 percent.
  • Use more of their available credit (have higher credit utilization ratios) by 2 percent.
  • Borrow more for their mortgages: Home loan amounts for men are 4.9 percent higher.

You show me yours…

Is there any point in these comparisons? Probably not. The financial differences uncovered by these studies are small, and you don't need a postgraduate degree in gender studies, anthropology or human biology (or be a rocket surgeon, to steal a phrase from the movie "St. Vincent") to notice some not-so-subtle dissimilarities between males and females.

But it can only be useful to recognize the distinct financial issues each sex faces. The eighth edition of Prudential's "Financial Experience & Behaviors Among Women" biennial study was published in June, and found women coping confidently with short-term financial issues, even though the pay gap (they earn on average 78 cents for every dollar a man gets) leaves them with significantly less disposable income. However they continue to be less certain about their abilities to meet long-term goals, in particular healthcare, retirement and college funds.

The question is: Is that because they're less capable than men of achieving those goals, or because men aren't fully recognizing the difficulties they face? In an interview with DailyFinance a few years ago, author and professor of finance at Santa Clara University in California Meir Statman observed that, in psychological tests, men are considerably more likely than women to believe they can choose stocks that are going to generate above-average returns.

"It's not because men are so smart," said Statman. "It's because men are unrealistically optimistic about their abilities."

Maybe it's unrealistic optimism that lets so many men shrug about paying their bills on time, keeping on top of their mortgages, saving for the future and so on.

All these studies can reveal important things about the sexes, and suggest things about our our own individual attitudes and actions that we may need to address. And that even includes ones designed to grab headlines.

Published 12/08/14 (Modified 06/20/16)

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