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To Her Credit

Women and financial anxiety: How fear impacts financial independence

Fighting financial anxieties looks different for everyone

To Her Credit offers targeted advice about personal finance based on unique challenges faced by women. It is authored by women with different financial backgrounds, dedicated to encouraging empowerment through financial literacy.

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Are you more likely to save your money in a bank than invest it in the stock market? When you have to make a big financial decision, are you likely to go to a man in your life for advice? If so, you’re not alone – particularly if you’re female.

Study after study shows the same conclusion: women are more anxious about their finances than men. On a scale of zero to 100, women scored higher on an economic anxiety index than men (26 versus 22) according to an Edison Marketplace survey, Women and Economic Anxiety, published in 2019.

When broken out, women of color scored highest of all (an average of 30) the survey found. Women were also less likely than men to say the economy is strong, less likely to describe themselves as financially secure and more likely to lose sleep over money troubles, the poll found.

See related: Creating a budget can help you cope with financial stress

Women say they are more worried about money than about their personal health, career expectations or relationships. And this isn’t something that’s necessarily improving with younger generations. Millennial women report more money worries than their male counterparts, who launch their careers in better-paying professions and pull in larger starting salaries, according to a survey by online lender Laurel Road.

“I always thought we were just anxious by nature, and we were just scared. And then I started looking at the numbers,” said Ada Calhoun, a freelance writer and author of the book “Why We Can’t Sleep: Women’s New Midlife Crisis.”

Where women’s financial anxiety comes from

The problem starts to build early. Parents are more likely to talk to girls about saving but to boys about investing and debt.  Once they get to college, women are more easily discouraged from finance-related majors like economics than their male counterparts and in general, tend to pick majors that lead to lower-paying occupations.

This may be part of the reason for the notorious gender pay gap, which is only aggravated by the caregiving interruptions and burdens that continue to disproportionately affect women over men. Calhoun focused on Gen X women, born between 1965 and 1980, but the struggles she documented hold true for women across the age spectrum. “A lot of women told me that they left the workplace to nurse a baby or take care of their dying mother, but when they came back they felt like they’d been punished severely for those breaks,” she said.

See related: Closing the gender pay gap

The statistics bear out that hunch. A calculator created by the Center for American Progress computes the lost income from when a parent takes time out of the workforce to care for a child. For example, consider a 33-year-old woman makes $80,000 annually before she takes a break to care for a child. If she returns to work after five years, the CAP calculator estimates she loses about $885,000 over her lifetime in forfeited wages, wage growth and retirement assets and benefits.

It should then come as little surprise that women are less prepared for retirement than men. Less than two-thirds of women have a plan in place so they won’t run out of savings after they retire, compared to three-quarters of men, according to a 2019 study by Nationwide Advisory Solutions. This gender gap persisted even when investors had access to financial advisors, the survey found.

See related: How women can save for retirement

Women often falter financially later in life because they’ve spent years putting others’ needs first, said Danielle K. Roberts, co-founder of Boomer Benefits, an insurance agency specializing in Medicare plans and benefits. “We hear many stories (from our clients) about how are they going to afford the costs of health care in retirement because they made more of an effort toward saving for their child’s college” than they did on their own retirement, she said. “And then, sometimes women turn around from being a caregiver for a child and become a caregiver for their parents.”

See related: Gaining financial independence later in life

Setbacks don’t inhibit all success, but they can throw confidence

The financial world, though, is not a completely foreign landscape to women. Banking and long-term loans and mortgages are subjects where women tend to feel quite comfortable asking questions and making decisions, according to a 2018 study, Winning Over Women, prepared for the finance industry by the firm Kantar Consulting.

They are also at ease talking about these decisions with friends and family – a key way that women gather and process information, said Audrey Looker, a Kantar vice president who led the research on the study.

But for women, financial topics such as stocks, bonds and other investments remain taboo. “To not be able to talk about an area that is so critical to their future, really affects women’s confidence on a huge scale,” she said.

In creating the study, Looker and her team dug into company data, conducted a 2,500-person survey, interviewed experts and consumers and ran focus groups. In surveying women about their financial knowledge, they found that even women who had taken time to educate themselves about financial products still lacked confidence in their ability to make investment decisions. And they tended to ask the men in their lives for advice on major financial decisions – including, Looker recalled, one woman who had no men in her family, so she asked her boss.

When it comes to financial services, “women think it’s a men’s world, and men think it’s a men’s world,” she said.

This is reinforced by society in general, and the financial services industry in particular. Consider:

  • Until a fix in late 2018, Google’s Gmail software assumed “investor” was a man.
  • Women surveyed by Kantar reported that when they walked into financial services offices, they were put off because “no one looks like me.” They were also likely to report feeling patronized or talked over.
  • In 2017, the financial services industry spent 13 times more money advertising in male-skewed magazines than in female magazines, the study reported. The ads women did see tended to feature older, white men, further signaling that this was not a sector where they belonged, according to the report.

The first step toward overcoming financial anxiety

If money and the jargon and rules that swirl around it leave you confused and uneasy, the first step toward easing your nerves may be to realize that you are not alone – nor is your fear unearned. Despite the hardships many women must overcome, you can make changes that will both ease your anxiety and shore up your financial future.

The next step may be simply to acknowledge your anxiety, and figure out what triggers it. “You know because your body or your thoughts will tell you,” said Lindsay Bryan-Podvin, a couples financial therapist in Ann Arbor, Michigan.

For instance, does your heart race and your palms get sweaty when it’s time to negotiate for a raise? There’s something there that’s triggering you, Bryan-Podvin said. Or maybe you find yourself checking your bank balance to the point of compulsion or totally avoiding dealing with your finances altogether. All these are signs of financial anxiety, she said.

Addressing financial anxiety looks different for everyone

Many personal finance experts advise novices to jump in feet first and start learning about what they don’t know. But that can backfire on some people with anxiety, said Bryan-Podvin. “Taking an action is really good for someone who is more behavior-oriented,” she said. “But [others] have to sit with those negative thoughts and untwist them and make sure they are more logical and realistic rather than negative and based in fear.”

Formal therapy, particularly cognitive behavioral therapy, is one route to take in naming and grappling with those demons. Meditation is another, as is practicing positive affirmation.

“Maybe a woman has a thought, like, ‘I’m terrible at math, so I can’t do investing,’” said Bryan-Podvin. “We have to help that woman bridge the gap. So instead of jumping to, ‘I’m Warren Buffett, I’m the world’s most powerful investor,’ we’re going to go to, ‘I’m better at math than I give myself credit for.’”

Bryan-Podvin rejects the idea that there is a list of personal finance prescriptions and fixes that work for all people. Some of her clients like to track every dollar in a budget. Others set up automatic savings deductions and then forget about it and move on. “There is this weird thing about finance – we think we all have to do it the same way, or we are doing it wrong,” she said. But that philosophy can just further reinforce anxiety, she said.

Tips for beating your financial anxieties

For those curious about dipping a toe in the world of stocks and bonds, Bryan-Podvin reminds them they are probably already participating to some degree, through a 401(k), IRA or some other income-related savings plan. A good next step after that, she said,  is to read The Little Book of Common Sense Investing by John Bogle, the founder of Vanguard Group and creator of the world’s first index mutual fund.

Break that money taboo and talk to other women, she said. Ask them how they handled their work-related investments. Get recommendations from them on accountants and financial planners. “Normalize it, bring it up,” she said. “You can say, ‘Hey, this year I’m trying to get a better handle on my investing. Who do you turn to?”

And if you end up in the office of someone who doesn’t listen to you, or makes you feel silly for a question you asked, it’s your right to find someone new. “You shouldn’t ever have to feel stupid,” she said.

Most critically, have enough confidence to provide for yourself before you spend on others, whether that means saving for college for a child or paying for care for an elderly parent, she said. “Investing in yourself is the best gift you can give your adult children,” she said. “That way, they don’t have to worry about providing for you in old age.”

In the end, though, one of the keys to calming financial anxiety is understanding that you can read all the books, listen to all the podcasts and skim all the blog posts you want, but the solution has to fit you. “That’s the whole point of personal finance,” she said. “You have to do what’s right for you and for your family.”

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