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Are Young Men and Women Getting the Same Financial Start?

Key Points
  • According to a recent Schwab survey, young women express more positive financial attitudes and aspirations compared with young men.

  • However, when it comes to getting a firm financial start on life, young women are still lagging their male counterparts in important ways.

  • Parents are in the best position to teach and reinforce good financial habits for both their daughters and their sons starting at an early age.

Dear Readers, 

This week I have a couple of questions for you. First, do you believe that young women and young men should have equal financial opportunities? And second, do you think young women and men should get the same financial education about money management, saving and investing? I imagine your answer would be "Of course!" And I certainly agree.

But despite our beliefs and best intentions regarding equal financial opportunity for males and females, Schwab's Financial Literacy survey on the money attitudes and experiences of a subset of Millennials (ages 21 to 25) and Gen Z (ages 16 to 20) reveals a disturbing gender divide: When it comes to getting a firm financial start on life, young women still have some catching up to do.

A couple of months ago, I wrote about some general trends that this same survey demonstrated, pointing out that this age group needs a reality check when it comes to finances. Analyzing the data further to focus on the differences in how young women and young men approach and treat money, some sharp distinctions appear that warrant a closer look.

Young women are on the right track in many ways

According to the survey, young women express positive financial attitudes. In fact, they’re somewhat ahead of young men in some areas. For instance, 67 percent of females versus 58 percent of males don't want to rely on others financially, with more females (51 percent) than males (40 percent) wanting to live independently from their families.

Young women also exhibited a greater understanding of day-to-day financial concepts such as budgeting and spending. And 76 percent of them compared to 64 percent of young men understood the importance of putting together a financial plan to reach their goals.

When it comes to making smart financial decisions, females also are ahead of males in terms of holding off on buying something or delaying a vacation in order to save money. They're also more willing to take an extra job to make ends meet.


So what's the flaw? Females are lagging behind males in saving and investing

While the survey statistics show that young women are saying and doing a lot of the right things, they still tend to face more financial hurdles. Here are a few revealing examples:

  • Despite expressing a strong desire for financial independence, 50 percent of young women versus 35 percent of young men have had to ask their parents for money for necessities like food, rent and utilities.
  • Young women were more likely to say it's important to pay off credit cards yet young men were less likely to carry a credit card balance or miss a payment.
  • While young women generally spend about 30 percent less than young men on a weekly basis, they have on average far less savings than males—$1,267 versus $2,000.

And here's the stat I find most worrisome: Despite their financial aspirations, young women are less inclined to invest. Of the young people surveyed, almost twice as many males as females had investment accounts and would choose to invest any spare cash.  

It would appear that while young women may be more practical when it comes to everyday things like spending, they're falling short on the bigger financial goals such as saving and investing. As a financial planner—and as a parent—I have to ask "why?"


Cultural habits may be part of the problem

Most of us will say that we want to treat our girls and boys equally, but do we? As recently reported in a New York Times article by Claire Cain Miller, recent studies show that certain cultural habits that put girls at a disadvantage still creep into our behaviors. And a lot of it begins at home.

For instance, although we may espouse workplace equality, research shows that even with something as basic as family responsibilities, girls are still expected to do more household chores than boys. An analysis by BusyKid, a mobile app and web platform designed to help children manage an allowance, determined that on average, boys earn twice as much for doing chores per week than girls, suggesting that the gender pay gap starts at home.

Another study found that parents tend to talk to girls about everyday money matters such as spending, earning and family finances and to boys about more sophisticated issues such as borrowing, saving and investing, setting up different financial expectations from an early age.  

What we can do to even things out

If some of the problems begin at home, so do many of the solutions. First, as parents, we can make certain that we have the same conversations about money with our daughters and our sons, emphasizing for each the importance of spending, saving and investing for the long-term. We can make sure household responsibilities are shared equally and allowances and compensation for paid chores are fair and equitable.

Beyond that, we should also treat our children as individuals and be aware that even in the same household, different kids may need different guidance. One important way to do this is to help our daughters understand the unique challenges they may face as women.

For instance, even before your daughter enters the workforce, have an open and honest conversation about the wage gap and other potential inequalities. Help her become her own advocate and feel confident negotiating terms and salary. Discuss the importance of women taking control of their finances, especially around retirement. With women living longer but generally earning less and being in the workforce for fewer years than men, this is an essential lesson.

Of course, young men have their challenges as well. The way to truly level the playing field is to do our best to teach, mentor and guide all the young people in our lives to make the most of their financial capabilities. Living below your means, being wise about credit and debt, getting started early on retirement savings with an IRA or 401(k), realizing the power of long-term investing to grow wealth—all of these concepts are the building blocks of a secure financial future for everyone.

Why it's so important

One very positive finding from the survey is that young people want to be independent and they want to learn. They're open to financial guidance—especially from their parents. And in a world where we all need to be increasingly self-reliant, I think it's more important than ever to be generous with our time, our knowledge and our experience to help our kids—both male and female—gain financial confidence. Our awareness and engagement now will not only help them, but perhaps future generations as well.


Have a personal finance question? Email us at Carrie cannot respond to questions directly, but your topic may be considered for a future article. For Schwab account questions and general inquiries, contact Schwab.

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