It’s such a cliché, but research does indeed seem to show that when it comes to money and investing, men often think they know more than they really do, while women know more than they give themselves credit for.
Experts call it the “confidence gap.”
Despite the enormous strides women have made – they are now earning 50% more than they did just five years ago – they still lack confidence in their ability to navigate life’s financial challenges and make sound, long-term investment decisions.
“While women exert tremendous influence in many areas—careers, parenting, health—they are not using their power when it comes to being financially ready for the next stage of their life,” says Abby Johnson, chairman and largest individual stockholder of Fidelity Investments.
“Our research shows a lack of confidence in women’s ability to make decisions about their own investments, as well as a lack of understanding of the long-term implications of making those investments,” Johnson observes.
What’s interesting is that, so far, women in the Baby Boomer generation (born 1946-1966) show the highest levels of money confidence and involvement.
Younger Gen X and Gen Y women, while outpacing previous generations in their earning power, seem less confident in their personal financial management skills.
Of course, one of the best ways for women to gain the confidence they need is to work with a female financial advisor, who understands the issues they are facing and gets their busy schedule.
It’s important to focus on “the needs of women throughout their various life stages,” says Fidelity’s Johnson, “such as guidance on how much to save in a workplace retirement plan; analysis that helps them afford their first home and plan for children’s college education; help with understanding the financial demands of child care and elder care; and what to do when faced with unexpected life changes.”
The bottom line is to help women make the good decisions they’ll need to achieve their long-term financial goals. Without guidance, women tend to start too late, and save and invest too little for their needs.
The Takeaway: Don’t let a lack of confidence hold you back. Get the expert financial guidance you need – and encourage any young adult daughters to do the same. The sooner you start, the faster you can get where you need to be.