Gender Difference in Approaching Financial Management

Men and women have different ways of approaching financial management which can cause some challenges when they need to work together. 

What are some differences between men and women around making financial decisions?

Due to societal pressure, men might feel more significant pressure in providing for the household. This can also reflect on managing money, especially after retirement. Once men retire, they might feel the gap of not being able to financially provide for their families, creating emotional struggles. Compared to women, this emotional challenge can be more significant for men as they don’t tend to open up emotionally as much as women do. To solve these emotional barriers around sharing financial responsibilities, men and women need to remember that we often have different communication styles, which will make discussing money an even bigger challenge in relationships.

Women also tend to be more conservative in investments than men as they want to get more details before making an investment decision. This might limit their investment growth opportunities compared to men but can also help assess risk. However, this could lead to financial disputes in the relationship if the women feel her partner is reckless in making investment decisions on behalf of the family. On the other hand, higher-risk investments may lead to better returns for the couple. There is no easy answer because the couple will need to figure out how to address and respect each other’s comfort levels when investing and get the other partner on board. The good news is by working together, men and women can use their different perspectives to make better investing decisions for the benefit of both partners.

How do couples with these differences approach financial management?

In most couples, financial decisions are managed by one of the partners, regardless of gender. Without both partners being involved in managing money, confusion and underlying assumptions may cause both partners to spend and save in ways that may place their financial goals at risk.

To have both partners involved in finances, couples can decide what parts of the budget they will work on. For example, in some relationships, one person may pay the bills while the other is responsible for making investment decisions. This can allow both partners to be involved in the process without getting overwhelmed by having every detail. Even working on your finances can provide you with some clarity on where you are financially at. This also gives accountability and responsibility to both partners.

One challenge some couples may be facing due to lack of accountability is one partner spending more than their budget can afford. Some couples try to solve this challenge by giving a spending limit to both partners, which can assign accountability to each partner and helps them to focus on their joint financial goals.

Why is it important to be involved in managing your finances?

Whether you are the breadwinner or not, you need to know the income and expenses of your household to be financially aware and contribute to your financial situation. Even if you are not the household’s breadwinner, understanding your income and expenses can help you identify unnecessary costs and cut down your costs to improving your savings.

Being on top of your finances is essential to be aware of your situation and be prepared for financial risks you may face, such as job loss, health loss, or divorce. If you get divorced from your partner who has been managing your finances, you might feel financially vulnerable. You can share financial responsibility to set up a joint account for joint expenses, mutual investment goals, and joint fun goals. You may want to set up separate accounts for specific financial goals you may have for yourself. This is a common practise in many relationships where both partners earn their own income. Suppose you are not involved in the finances of your family, and you are the primary caregiver. In that case, it is a good idea to learn more about the family’s finances by communicating with your partner about how finances are set up, where finances are located, and how you can get more involved in the household’s financial management.

How can women and men approach financial management together?

Whether you are the breadwinner or not, you need to know the income and expenses of your household to be financially aware and contribute to your financial situation. Even if you are not the household’s breadwinner, understanding your income and expenses can help you identify unnecessary costs and cut down your costs to improving your savings.

Being on top of your finances is vital to be aware of your situation and be prepared for financial risks you may face, such as job loss, health loss, or divorce. If you get divorced from your partner who has been managing your finances, you might feel financially vulnerable. You can share financial responsibility to set up a joint account for joint expenses, mutual investment goals, and joint fun goals. You may want to set up separate accounts for specific financial goals you may have for yourself. This is a common practice in many relationships where both partners earn their own income. Suppose you are not involved in the finances of your family, and you are the primary caregiver. In that case, it is a good idea to learn more about the family’s finances by communicating with your partner about how finances are set up, where finances are located, and how you can get more involved in the household’s financial management.

Open up about your finances

Most people prefer having conversations about money when they are in a good place financially compared to challenging times. However, talking about your finances openly with your partner is crucial regardless of the situation. If you are having financial challenges, discussing them with your partner may help you understand the situation better and collaborate with you on finding solutions. Having money conversations when you are doing well is also very important, mainly because financial circumstances can change quickly (we all learned this during the pandemic). Your partner lacks the economic confidence to deal with a drastic change in the family’s financial position.

Talk about the problem, not the person

If you feel defensive about having money discussions because of the misalignment between goals, focus on the problem instead of blaming the person’s decisions. This can help you and your partner feel better about making mutual decisions instead of blaming and guilt. Also, try not to have money discussions when you are already feeling anxious about your finances. Wait until you calm down first to create a better outcome after the discussion.

Have a scheduled meeting:

If you and your partner have hectic schedules, schedule a regular meeting to have these financial discussions and create an agenda to address the pressure economic issues of your family. These meetings can take place monthly, weekly or annually. You choose. By arranging recurring meetings you can work through financial topics in a focused manner compared to shorter and instant conversations that might not get you results.

As a financial expert, a CFP can help you understand your financial situation and identify economic opportunities for you to reach the goals you might not be able to identify on your own. If you want to get started with a financial plan, book your complimentary 30-minute financial planning session with our team! We are here to help you on your financial journey as you build your financial fortune.  www.askjackie.ca/contact-us

 

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