Finance 101: Financial planning for women

Yes, it can be different.


Does financial planning differ between genders? As the old chestnut goes, “Women are from Venus, men are from Mars.” I think we all can appreciate that the genders differ in many important ways, and neither has a monopoly on the most helpful traits. That being said, I believe women have a significant advantage when it comes to being prepared financially for their goals and their future. Many other financial advisors agree, and some studies bear out our observations.

So what makes women more well-suited to embracing financial planning? When I first started as a financial representative many years ago, I had many clients from either gender. I was glad to help people with the knowledge I had, and did not care about things like gender. As I progressed in my career, I started to notice that working with women was more satisfying, and that men sometimes proved a bit frustrating. I didn’t know it then, but it had to do with how they approached the task of planning and investing.

Fast-forward to today, and I can say with confidence that the average woman I’ve dealt with is better suited to planning and investing. Here’s what I’ve found:

  • Women tend to save more money than their male counterparts. This means they have better odds of reaching their goals, and can do so with lower risk. A Vanguard study recently showed that more women than men signed up for their company retirement savings (up to 16 percent more), and save a larger portion of their salaries. Men have more money in retirement accounts, but most of that is accounted for by the income gap effect, and by the fact that women often have an interruption in earning and savings due to having children.
  • Women feel less secure about their financial knowledge. This is a strength, because they tend to seek out knowledge and education when they don’t really understand financial concepts. Women are more willing to seek, and heed, guidance from an advisor: Vanguard reported that 42 percent of women, vs. 36 percent of men, turn to professionals to manage portfolios. Women would rather understand and have a base of knowledge from which to make their decisions. Overconfidence can make for erratic investment decisions right when consistency really matters. It’s a bit like the “men asking for directions when driving” syndrome. If you’re afraid to ask for help, you might get, and stay, lost.
  • Women are much more likely to do actual, written, comprehensive planning. This allows them to clearly identify the goals they would like to reach — a well-funded retirement, travel, things for their kids and grandkids, and healthcare. This allows them to then see what kind of investment approach will give them the best odds of getting to where they want to go. And if they can do it with lower risk, they do so.
  • Women have a healthier respect for risk. It is more important to them to try to minimize unnecessary risk than it is to maximize their investment returns. Simply avoiding mistakes is more powerful than making great market calls. Furthermore, they want to just see that they are progressing to their goals, not to brag to their friends about market returns.
  • Women are more deliberate when making planning and investment decisions. They may take longer to come to a decision, but once they do, they tend to stick with the plan through thick and thin. This is a byproduct of the learning they have accumulated, and will help keep them from making rash decisions when their investments drop in value.
  • Women don’t change their investments nearly as much as men. They are buy-and-hold investors, and don’t see the benefit of more activity.
  • Recent research has shown that women tend to get better returns on their investments. If that is borne out, it would probably be due to a combination of things like long-term planning, education, patience, and discipline.

Not so long ago I read some interesting research on retirement planning. Researchers asked the participants to draw a picture of what retirement meant to them. The results were analyzed, and a pattern emerged. The men tended to draw things like graphs, charts, and other quantity-type things. The women tended to draw things like a picture of them and their family at the beach. Men were focused on money and numbers, whereas women were focused on goals that would make them happy. I can’t emphasize how much I agree with the focus on goals and happiness.

So while we started out discussing the difference between women and men and how they approach financial planning and investing, what we are really talking about are traits that can help all of us achieve our goals — the willingness to seek guidance, the discipline to plan in a purposeful way, having a healthy respect for risk, deliberateness, sticking with a plan, and a commitment to save more. And maybe the most important of all? A focus on happiness as a goal, not more money.

They simply aren’t the same.

John Kageleiry is a business writer and financial planner. Read more finance columns at Have a question for “Finance 101”? Email it to