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Women might have more savings set aside if they could just control their spending — at least that’s what we’re led to believe.
An analysis of financial articles that appear in women’s magazines found that 65 percent use language that (incorrectly) define women as “excessive spenders.”1 In many cases, the articles presuppose that women save small sums, earn small paychecks, or depend on financial support. Others seem to suggest that women are not in their own right legitimate earners and that their chief economic contribution to the household finances is in spending less of their spouse’s income.
Indeed, the language used to communicate with women about how they manage their money all too often portrays them as somehow less capable than their male peers, which discourages important dialogue about the financial headwinds many women still face, the hurdles they’ve overcome, and the success they consistently demonstrate as savers and investors.
To correct money misconceptions about women, particularly those perpetuated by the media, MassMutual is partnering with the Washington Post to “Write the Wrongs,” using provocative headlines to highlight common myths found in financial literature. Why does it matter? Because to enable financial inclusion and equality, we must change the conversation.
Here, we debunk the five most common money myths that persist about women.
Myth #1: Women are overspenders
Women are often portrayed as frivolous, or over spenders.
While it’s true that women tend to spend more money in certain consumer categories, men statistically spend more overall.
A recent analysis of government data by SmartAsset — which focused on single millennials to control for spending patterns altered by household makeup — revealed that millennial women spend slightly less per year than their millennial male counterparts. Men, of course, also earn more on average than women.2
The biggest spending divergences, according to the data? Compared with men, women spend an average of roughly $850 more per year on reading material and education, reflecting their tendency to prioritize continued education. And, they spend less than half what men spend on alcohol and tobacco, an average of $620 less.
On the other hand, millennial women were found to spend roughly 42 percent more on apparel and personal care items than men, some of which the research team said can be explained by the fact that women pay more than men for the same goods and services (think haircuts, razors, and shoes). The most recent report on the so-called “pink tax” from the New York City Department of Consumer Affairs found that products marketed to women cost 7 percent more on average than similar products marketed to men.3
Other findings from the SmartAsset analysis: Women spend slightly more on housing, but 22 percent less on groceries and eating out. Women also spend less on entertainment and transportation, as men are more likely to own a car and women more likely to take public transportation.
Myth #2: Women are too timid to invest successfully
It’s true that female investors are generally less confident than their male counterparts — but they are by no means less competent. In fact, research reveals that women are often better long-term investors.
According to a survey by Fidelity Investments, female investors outperform male investors by an average of 40 basis points, or 0.4 percent — a seemingly negligible difference but one that packs a punch over time. Using average workplace savings rates (9 percent for women and 8.6 percent for men) and a hypothetical salary of $50,000, women who start investing at age 22 would have $276,000 (or 15.4 percent) more socked away by age 67 than their male counterparts.4,5 That estimate assumes women achieve a 6.4 percent average annual rate of return, versus 6 percent for men.
Another study by Warwick Business School, sponsored by Barclays, found female investors outperformed males by a wider margin — 1.2 percent.6
Why the superior returns?
- Female investors tend to buy and hold, which reduces trading costs and can lead to higher returns. By contrast, men trade more frequently and are statistically more likely to be overconfident in their ability to beat the market.7 (Learn more: What women get right about investing)
- According to MassMutual research, women also maintain more balanced investment portfolios with an asset mix aimed at both growth and preservation, while male investors are more likely to overweight on equities, specific market sectors, and individual stocks, leaving them more vulnerable to market downturns.8
- Finally, women more readily seek guidance from a financial professional, which helps them stay the course during periods of volatility and avoid costly knee-jerk reactions that perpetuate a cycle of buying high and selling low.9 (Learn more: Working with a financial professional. Why not go it alone?)
“Women know that the financial decisions they make today will affect their and their family’s future, so they often choose to have a financial professional educate them as to what steps they should take,” said Marnique Sparago, a financial professional with Coastal Wealth in Ft. Lauderdale, Florida. “When women have financial knowledge, they are more capable of making smart financial decisions.”
It’s worth noting, too, that women are sometimes more conservative with their asset allocation because they have less saved for their future, a byproduct of lower lifetime earnings, and feel they cannot afford to take undue risk with their asset allocation, she said.
Myth #3: Women are not good savers
Men do have larger account balances than women, but women sock away a bigger portion of their paychecks every month.
A 2019 study by Vanguard Center for Investor Research found that female employees at nearly every income level had participation rates in voluntary workplace enrollment plans that were 5 to 14 percentage points higher than men.10 Once enrolled, many also saved a higher percentage of their paychecks than men.
While men had slightly higher elective deferral rates overall (because men at the lowest income thresholds outsaved their female peers), women in both automatic and voluntary enrollment plans with wages above $50,000 had deferral rates that were 3 percent to 6 percent higher than their male counterparts. (Learn more: Retirement planning: What women do right)
That figure is likely to climb. A 2022 MassMutual study of consumer saving and spending habits found that 25 percent of American women said they started saving money for retirement or emergencies during the pandemic and almost all said they planned to continue saving after the pandemic ends.(Calculator: How much should I save for my retirement?)
According to data, women also typically shop smarter with an eye toward savings. Roughly two-thirds of women surveyed by Insider Intelligence said they compare prices before making a purchase, versus 54 percent of men. And roughly 70 percent of women said they frequently use their mobile devices to compare prices while in a physical store, while only 21 percent of men did the same.11
Financial discipline is a good thing, considering women are the new face of wealth. By 2030, American women are expected to control much of the $30 trillion in financial assets that baby boomers will pass along to their heirs.12
Myth #4: Women aren’t interested in the stock market
It’s true that women have been far less inclined than men, historically, to invest in stocks outside of their workplace retirement accounts. But the COVID-19 pandemic gave women a chance to flex their financial muscle as never before.
A 2021 Fidelity survey found that 67 percent of women who earn $50,000 or more and actively contribute to their workplace retirement savings plan were also investing outside of retirement during the early days of the pandemic, up significantly from 44 percent in 2018.13 Female millennials, ages 25 to 40, led the charge with 71 percent declaring themselves to be an active investor.
Despite their growing participation rate in both taxable brokerage accounts and workplace retirement plans, however, Fidelity found that only 33 percent of female investors feel confident in their ability to make investment decisions and only 35 percent felt confident that their non-retirement savings were invested appropriately.
Financial literacy is the key to bringing new female investors into the fold, said Caren Levine, a financial professional with MassMutual in Greater Philadelphia.
“Professional women who are more educated about investing are more likely to be confident investors, but many women still don’t take an active role because they don’t perceive it to be their responsibility,” she said. “If you tell them why it’s important and they meet with a financial professional, they gain the confidence they need to participate in the stock market. Women just need to be educated and respected.“
Many female would-be investors already know more than they think.
A 2021 study by George Washington University’s Global Financial Literacy Excellence Center found that women disproportionately responded “do not know” to questions measuring financial knowledge, but when that response option was unavailable, they often choose the correct answer.
“We find that about one-third of the financial literacy gender gap can be explained by women’s lower confidence levels,” the report suggested. “Both financial knowledge and confidence explain stock market participation.”14
Myth #5: Most women rely on their partner for financial support
Women today prioritize financial independence, perhaps because of the challenges they face.
For example, women still earn just 84 percent of what men earn, even with the same level of experience and education.15 Lower incomes make it harder to pay off student loans, build wealth through homeownership, and save for retirement. Consider: The average account balance of female participants in defined contribution retirement plans, such as a 401(k), was $88,393 in 2020 compared with $131,045 for men, according to Vanguard.16
Women also live more than five years longer than men, on average, leaving them far more vulnerable to longevity risk, or the threat of outliving their savings.17 (Learn more: 5 reasons women should be financially selfish)
As a result, women are forced to be proactive when it comes to securing their financial future, establishing their own credit, and providing for their families.
Fully one-third of married couples today choose to bank separately rather than comingling their money, according to a 2022 GOBankingRates survey.18 (Learn more: How to share finances in marriage)
And in 2019, the last year before the COVID-19 pandemic and the most recent data available, two-thirds of mothers were either breadwinners or co-breadwinners for their families, according to the Center for American Progress.19
Conclusion
When we accurately portray women as skilled stewards of their financial assets, we counter the corrosive effect of media misconceptions. We elevate female savers and investors. And we inspire women to participate in wealth-building strategies that help secure their financial future. And that’s no myth.
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1 Starling Bank, “Make Money Equal: Linguistic Analysis 2018.”
2 SmartAsset, “How Millennial Men and Women Spend Money — 2020 Edition,” Feb. 12, 2020.
3 New York City Department of Consumer Affairs, “From Cradle to Cane: The Cost of Being a Female Consumer,” December 2015.
4 Fidelity Investments, “2021 Women and Investing Study," 2022.
5 Fidelity Investments, “Who’s the Better Investor: Men or Women?” May 18, 2017.
6 Warwick Business School, "Are women better investors?” March 1, 2018.
7 Vanguard, “How America Saves 2021.”
8 MassMutual, “MassMutual Women’s Retirement Risk Study,” July 2018.
9 MassMutual, “MassMutual Women’s Retirement Risk Study,” July 2018.
10 Vanguard, “Women versus men in DC plans,” January 2019.
11 Insider Intelligence, “Men Are More Likely to Shop In-Store and Pay Full Price,” March 22, 2018.
12 McKinsey & Company, “Women as the next wave of growth in U.S. wealth management,” July 29, 2020.
13 Fidelity Investments, “2021 Women and Investing Study," 2022.
14 George Washington University’s Global Financial Literacy Excellence Center, “Fearless Woman: Financial Literacy and Stock Market Participation,” March 2021.
15 Pew Research Center, “Gender pay gap in U.S. held steady in 2020,” May 25, 2021.
16 Vanguard, “How America Saves 2021,” June 2021.
17 Centers for Disease Control and Prevention, “Provisional Life Expectancy Estimates for January through June 2020,” February 2021.
18 GOBankingRates, “One-Third of Couples Bank Separately, Survey Shows. What Do Experts Think About Ths Practice?,” Jan. 31, 2022.
19 Center for American Progress, “Breadwinning Mothers Are Critical to Families’ Economic Security,” March 29, 2021.