Why Finance Is Made For Women and What Men Are Missing That Will For Sure Make Them More Returns
By: Mia Gradelski
Tags: Wealth, Economy, Business, Women, Finance

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As we all know, the financial field is still predominantly made up of white, Hampton beach weekend goer golf fanatic Wolf of Wall Street type men. When you think of finance, it is usually through these unrealistic scenes in films blowing up money on yachts and partying with strippers. I’m sure some bankers or hedge fund managers still act this way because they can and unfortunately want to, but what you don’t see 99% of the time are the 80-hour grueling workweeks, unpredictable firings, or late night unexpected phone calls that lead to burnout and health problems that can never be solved by a steep paycheck or fancy title.

Congratulations, you work hard 10 hours a day and now are promoted to manager where you work 12. As finance and business are traditionally very quantitative-driven statistical-based fields, they are also very lucrative fields that require a lot of money up front to invest in for a degree, tutors, and lost time which only a select number of individuals to date are able to afford. Business is a selective, competitive, feisty, and sardine-packed field because there are big decisions on the line, gaining insight to direct the largest companies in the world towards launching an IPO, M&A transaction or solving the wealthiest business leaders in the world, by no surprise most likely men. As a result, the rewards are spectacular until you realize the heavy toll it takes on the rest of your life and how little you really know about your own personal financial situation.

I first became enthralled by these two emergent fields of finance and technology back in middle school. I knew they were extremely expansive and innovative, something I wanted to explore as a 16-year-old kid collecting every Nintendo DS I could find! I was introduced to economics and programming at this age where I attended 10–20 person classes as the only girl in sight. To this day, it happens most of the time still in college and to tell you the truth, it really does feel awkward and annoying when you know your friends want to be involved in these fields but are too shy to try something because they are worried they will make mistakes. Something you have to get over earlier the better if you want to actually advance in this world.

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Real Reason: Why More Men?

I’m not going to stir the debate on who works harder or who goes through more because I’m sure the men reading this don’t even realize what we ladies deal with on a daily, more specifically monthly basis, if you know what I mean. But the real answer to this question is understanding that there is no answer in itself.

It is all based on history, family, and influence, not your gender or the amount of effort you put in to get accepted into business school or land that interview. What I can tell you is that when it comes to managing money according to countless studies that you can find anywhere online, despite an immense gender gap in the financial and STEM field with a lack of financial literacy for women and stereotypes against them, historically, women’s investments outperform those of men by 1% according to a joint study from the University of California, Berkeley, and the University of California, Davis.

There are several reasons behind these secrets that are rarely spoken about that make all the difference:

Live Longer

With an average of 5 years added to their life and in investing terms, that is an asset. Time = Money. Everyone wants more time because you cannot buy back time. A longer time horizon also means more opportunities and options. More diversity = the better.

More Graduates

More degrees, more luck in life along with knowledge but still a difficult time getting into these fields due to connections, family, and inheritance. In 2019, there were 1.35 females for every male who graduated from a four-year university. 33% of women have an advanced academic degree, compared to 32% percent of men, according to a 2016 Census Bureau report.

Women Have Less Debt

A 2016 analysis by Experian shows that women carry an average of 3.7% less debt than men overall, and their average mortgage loan is 7.9% smaller. The Vanguard report found that men had borrowed an average of $10,424 to women’s $8,755, a difference of about 16%. And a 2017 study by GoBankingRates found that men had an average of $95,057 in debt compared to $31,037 for women — more than three times as much despite fewer women working in the financial industry.

More Men Invest In The Stock Market

The stock market is all about volatility. Men are known to be less patient which means they take investing as a game instead of a long-term goal-oriented approach. They invest more but lose more unstrategically.

Women Are Less Confident About Investing

This is actually a good thing because if they were excited and enthusiastic to it like men, they wouldn’t take it seriously. Women weigh their options more carefully because they are more risk-averse, which is your best friend in the stock market. As you get older, this is also a rule you must follow in order to prevent bankruptcy and financial ruin during a pandemic with not enough cash on hand for example.

Women Earn Higher Returns

Believe it or not, with more mutual funds and long-term index fund investing, women are more strategic, slow-paced but thoughtful about their decisions leading them to more success down the road. Men might dominate the field but in their personal lives, they struggle more than women.

Men Are More Comfortable with Risk

The older you get, your risk tolerance must be lower because #1: you have less of a time span to live so your gains cannot offset your losses as quickly anymore and #2: you need more cash since you are gearing up for retirement as you are older and have less energy for a full-time job. As with sports, men typically see investing as gambling. This explains why there are more men that trade options (riskiest bets in the market) than women.

Women Are More Patient

Women trade on average 27% less frequently than men. This explains outperformance because the stock market always outperforms. The worst intention is to get rich quick because short term investing is only for losers.

Women Are Open To Seek Financial Guidance

As there are more women counselors, therapists, and nurses, the typical professions that work with patients or clients and need to be great listeners, women are also more open to doing the same for themselves. They aren’t scared about letting out their emotions, something that comes in handy with investing while men keep it to themselves trying to act macho and tough assuming they are making the best decisions, rarely considering consulting anyone with a different perspective that can really help them.

Women Are Historically Better Savers

No one can predict the future. What is certain is only uncertainty. No matter how much insider trading (illegal) you could possibly obtain or innovative Python algorithm on your terminal you may have, that is part of the thrill of finance and exactly what men have wrong. They play it as a game. Your finances shouldn’t be something fun, they are serious and determine if you will live a financially free life and be able to achieve your goals. For further confirmation, 12.4% is the average amount of their paycheck that women contributed into their retirement accounts, compared to 11.6% of their paycheck for men. Plan for the worst, hope for the best.

Women Are Forward Future Looking

A 2017 study by Fidelity found that women save a slightly larger percentage of their income than men do, both in workplace retirement accounts and in outside accounts like IRAs. Similarly, a 2017 Vanguard survey found that women are more likely to take part in workplace retirement plans, such as 401k and 403b plans, than men earning the same level of income. Women also put more of their pretax earnings into these plans: between 2% and 8% more than their male coworkers.

Women Spend Less

A 2015–2016 Consumer Expenditure Survey by the Bureau of Labor Statistics highlights several differences in spending choices between single women and single men.

Here’s how the sexes stack up in different areas:

Total Spending: Single men spent slightly more than single women overall — $35,018 as opposed to $33,786 but because men earned roughly $10k more per year than women.

Food: Single men spent more on food than single women. Their annual food bill was $4,173, as opposed to $3,680 for the ladies. They also spent much more on alcoholic beverages — $537 per year compared to the women’s $234.

Clothing: Not surprisingly, women spent more on “apparel and services” than men. Their annual cost came to $1,140, while the men spent only $813. Women also spent $595 a year on personal care products and services like skin and hair care — more than twice as much as the men’s $233 per year.

Cars: Men spent more than women on personal transportation — a total of $5,507 per year as opposed to $4,273.

Entertainment: Men and women spent roughly the same amount each year on entertainment. However, they split up their entertainment budget in different ways. Men spent an average of $835 on “audio and visual equipment and services” but only $206 caring for pets. Women, by contrast, spent $725 on their home theaters and $488 on their pets.

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Misconception

You would think that if you work in finance, you would be an expert in your own personal financial journey. At the end of the day, it’s not about how much you make, but how much you pay yourself and keep in the bank. There is no evidence that men spend more or less than women because we all have our own preferences and desires, but when it comes to our financial health, the most important thing we can control in our lives, men are surprisingly lacking which can all be controlled due to their lack of self-control and impulse to outperform other investors. Never believe you are the smartest in the room because it will haunt you and turn you into the dumbest.

So Is It Really For The Money?

As much as the financial industry seems enticing with the lavish weekends bankers have and what they buy their kids, once again, what you see is usually never the case. Just like with social media, no one will show you their struggles because that will get no likes, even though I thought reliability is more popular but regardless, you get my point. More often than not those who are showing off are going through a miserable divorce, needing to pay lawyers up to 1 million to gain custody over their assets and children, maybe dealing with family and health problems, and feeling miserable at work, only for the money to one day retire in peace but how much peace after a hectic life?

I’m not saying all men do this but according to a Harvard study when it comes to who will work for the love of their job, not for the paycheck, women are in the long haul once again. According to the study, 50% more women between the ages of 60 and 64 compared to their male counterparts who retired were still working in 2013 — not necessarily for the money, but rather because they were invested in their careers.

That says a lot.

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Men Myths

Don’t worry, I won’t be diving into the obstetrician ancient history side of things with Adam and Eve, this is instead going into why men dominate the STEM and finance fields.

First off, let’s debunk the classic myths on why we assume men rule these fields:

Myth #1: Men deal with money better

Myth #2: There are more statisticians, mathematicians in the quant field

Myth #3: Men have more money

Myth #4: Men are able to deal with harder challenges than women

Myth #5: Men are more addicted to money than women

Now a few of these may be swayed more in 1 direction than in the other, but what is for sure is that it has nothing to do with putting more effort in their work or men’s fascination with money.

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It’s simply Influence, Family and Inheritance that play the biggest factor.

Drive

Whether it’s on social media or in your personal life, who are the people you follow? It can be for any reason, maybe fashion inspo or how to seem more professional. Whoever it may be, the people you’ve really followed the most in your life are your parents even if you moved out at 17. With influence, comes money and greed, something only the wealthy had to set the ball rolling in these lucrative fields in history.

Wall Street got its official start on May 17the, 1792 by Peter Stuyvesant, of course, no other than a wealthy billionaire. This kickstarted the job market and in every field since the economy runs behind it all. This is where men got their start. Peter was a father to a son and as a result, passed it down through inheritance. Business is a part of every industry, from farming to nail salons and during this time, women were known to be the housemaids and mothers to the children as the men were the breadwinners.

This didn’t change until the feminist movement roughly 200 years later in the 1960s when women began to enter the workforce as a high labor market participation grew during World War II when many male soldiers were dying or away, women had to take up mundane and often painful, grueling hourly jobs such as hammering nails to produce cardboard boxes to working with dangerous sewing machines at large to support their family in the states. Yet, since women were only allowed in the industries that no one wanted, similarly to the way slaves were treated, men still kept dominance in the lucrative, fantastical, over the top fields of finance and STEM where real and important real-world decisions were made.

As a Polack, I have to shout out Marie Curie for breaking barriers as the inventor of the X-Ray. Without that, I wouldn’t have had a successful implementation of stitches in my first and hopefully last big cut when I was 10 in a swimming pool and during this pandemic, we couldn’t be more grateful her the X-Ray since a lot of that same technology used in X-Rays are for cat scans and to produce defibrillators to keep people alive!

Influence

Andrew Carnegie, John D. Rockefeller, and Peter Stuyvesant to name a few of the greatest business pioneers (men if you haven’t noticed) of all time became successful mainly due to the influence, discipline and boost from their parents. I’m not saying that rich people don’t work hard at all. They certainly do but it doesn’t help when you are already born into wealth. That’s a leg up in itself.

We’ve all heard at least once in our lifetime from our parents whether it was an expectation or stern family chat before attending college about their expectations on what we should do about our lives. When you have a child, you always want the best intentions for your kid to grow up and become more successful than you. That not only means you have to invest more money than it took your parents to raise you but constant dedication, nurturing sacrifice, and a heck of a lot of money betting on a return.

Exactly how much does it cost to have a child? This is a debate that I’m specifically intrigued and curious by especially being the fact that I live in the wealthiest country in the world where the poverty rate is 11%. The poorest people tend to have the most children, that makes sense. Okay, I was certainly sarcastic there but I guess I can see where those folks are coming from. You either want more love or bet that 1 out of your 5 newborns will become a billionaire so they can support the whole family and the rest of the siblings and parents not work a day in their life. Sad to say but there is a less than 0.003% chance you will become a Musk.

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Real Price of A Child

Due to inflation and the 3% rise in public education each year, I would recommend allocating roughly half a million until they move out of the house. Yes, I said $5000k. Some students are ambitious and get jobs here and there like I did at 15 to feel good about myself, but as we’ve always discussed, a job won’t move the needle in your life and cover the expenses. Allocating more than what you expect is better than running out what most Americans with too many children do.

With taxes and being that young working at McDonalds, kids tend to spend all their hard-earned money because they’re just too young to understand about how that money could be used better or how to budget properly. All they want to do is brag they made $10 per hour after school which is exciting but won’t help in the grand scheme of things if not managed properly.

According to New York Life, the cost of raising a child until age 17 in 2020 is on average $435,610. Low-income couples spend $174,690 on average to raise a child and depending on where you live, if you are a self-conscious family that wants to show off buying luxury goods that the child will grow out of 3 months later, expect to allocate 1 million till college.

Now that is a lot. I get it. Most Americans don’t even have a net worth of a million and the average cost of a house in the states is a child till their 17 but that explains the poverty rate. Families are not weighing their options. Have kids when you are in a better financial situation. Don’t put more stress and costs on your plate. You have to deal with your situation now before it gets better.

Personally, I’m truly grateful I’m an only child. I’ve always said that and forever will. And no, just because I’m alone doesn’t’ mean I’m lonely. I’m the last person to get bored and I’m also thankful I don’t have siblings. But the reason being is not because I don’t want to deal with unmotivated annoying sisters and brothers or have to share my ice cream cone or room but rather because it is the best decision my family ever made and anyone else.

If my family had another child, my life would be turned around. I would not only get less attention, but we would also have to live in a smaller place, eat cheaper less organic healthy food, not have that much peace and everything would be different!

Sole Child

This reminds me of what they did in China which I don’t think is crazy for once. In the 1970s the Chinese government initiated a one-child policy due to the overpopulation after WW II in 1949 as this would bring more money to the country, build a better stronger army and more food supply. China, the most populated country in the world needed a break from all the crying babies and although unrealistic families were angry, the government was right and saved millions from going into debt and bankruptcy on the streets.

Unfortunately it was relaxed in November of 2013 due to the slower economy and more job openings feeling that it was unfair to instill such commands ruled by the government which makes sense but should still be recommended, especially in the US.

With the exposure to education and experience, the wealthy tend to have fewer children so they could make the financially responsible choice to put in more money to supply tutors, babysitters, the best boot camps, private schools, donations to IVY leagues, a nice easy referral to land that position at daddy’s office or $250k to bootstrap for your child’s next venture, cough cough, Bezos. The more kids you have, the less you can give all of your children these opportunities. For Bezos, that amount of money could have been spent on another child but his parents knew he was destined for greatness.

More doesn’t always mean better, especially financially but of course, it is your choice, just my recommendation.

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Take It or Leave It

Influence is all over you and depending on how much you want to listen to it (parents, mentors, family members, etc.), it can help guide your career on the right path. But no matter what direction you take, your parents will only help you so much. Yes, they can babysit you into bringing you the best programs in the world, but unless you take the initiative to do so yourself, they won’t guide you forever.

That is why the rich get richer and the poorer tend to get poorer or stay the same. With no access to investing or tax-advantageous opportunities, it is hard to break out of that gap. As with women, men see what their family has been up to for generations in their family business and have more confidence and reliance in this field as opposed to women who just trust that they will be treated fairly and it is also made for them.

It is much easier to become wealthier born as a trust fund baby than start from scratch. Parents have a big effect on the way we live our lives, whether we listen to them or not, if we learn from them and see the lifestyle they provide us, we usually want to follow in their footsteps as the easy route. I’ve seen far too often at school that boys want to get into the finance industry because of the lifestyle dad provides. It is upsetting that most people choose money > career which soon leads to burnout, most common in the financial industry.

If you saw your dad in finance and you were his son in the 80’s till today, you most likely are working in finance today. Less work is done on your part to apply since your dad helped cut the corners to land this job that you hope you have for the rest of your life. Then that son will pass that sentiment on to his children and it continues as an inheritance, male-dominated cycle. Now I’m finally seeing more stay-at-home dads than moms, but still, the lack of diversity and gender gap is still there.

My Opinion

I don’t know if it’s because women realize that money isn’t everything in this world or that it is hard to sustain yourself in the financial industry, something I’ve noticed the men in my life at least learned later on in life, but I believe women are more strategic, realistically pessimistic and better planers that make them perfect candidates for this industry.

Pay Gap

Many people don’t realize why women get paid less than men. It has nothing to do with work ethic or the quality of results they produce. First off, money is a taboo subject so we never know enough on how much less women make than men if not at all but I’m sure they do since we never speak about it since men are comfortable and women just have to take or leave what they are offered. But with sports, there is a left reason. There is simply less of an audience to watch women than men play football, soccer, tennis virtually any sport. Sports is entertainment and fewer viewers = fewer paychecks for female players. Simple as that. It is the sad truth about the entertainment and advertising industry.

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The Financial Truth

So if sports isn’t made for us financially, why is finance? Well, how could that be? If there is a larger pay gap and less inclusion in the most lucrative field in the world, how is it made for us?

As mentioned earlier, women have different psychological cues and they use their emotions more than men. Finance is the most personalized field because we all have to deal with money, whether or not we studied it in school or buy things on a daily basis. It impacts every human on earth that pays bills or needs to have a roof over their head.

Women also tap into their emotions more. This could be a good or bad thing especially since the stock market is known for being volatile and unpredictable, something that usually sparks high fear and uncertainly having your emotions go through the roof. Although that might happen, with men, they take more chances and act as if it is a game instead of for the long term. Women are known to not only take their time and have patience through weighing out options, they use their emotions to their benefit and don’t let them take control as men seem to do as this is a Las Vegas casino.

Now disclaimer, everyone is different but what I’ve encountered from working on the trading floor at 16 and with dozens of personal advisors myself, men rush the game. The other day, my mother and I were at the bank. We always prefer to be extra conservative, especially during a pandemic and have 2 years of cash in case of an emergency. I know I know. It’s only recommended for 6–12 months but in the long run, better be safe than sorry. The critics out there will say that is such a waste of money and cash is just devaluing your worth. Every day you are losing money. Guess who says that? Men do and women agree 2 years. Who ends up more financially stable and lives longer? Women!

The last thing you want to do is scramble to find a job and work at McDonald’s while broke during a pandemic trying not to get evicted. Yes, sure, men who work in the financial industry know how to prepare for uncertainly as the stock market presents itself like this all the time, but women weigh it differently and they view all options producing more cash flow returns.

Toy Check

I could remember as a child when I wanted a toy my dad would buy it immediately for me not waiting the traditional 72 hours for big to mediocre size purchases, let’s say over $1k and my mother would extend it to a few days of weighing the options if it is really worth it. She asked me to go through my toy box, see if I can donate something and get money for to buy a new toy and see how much I really wanted it. After this pondering and time, I saved thousands over my childhood that I’ve now grown immensely stashed into a ROTH IRA. These little techniques that women utilize and who knows where it comes from, are saviors in the financial world that men need to learn more of.

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Take Away

As there are more women counselors and therapists, I believe financial advisors/brokers, traders, and financial analysts are a perfect fit for women. Women don’t rush things as quickly as men and show more empathy according to the data above presented. The worst thing you can do is rush over a decision with your money because then you have to pay taxes to withdraw your money, deal with penalties and annoying rules in the process! Gambling is not investing and planning for the future is not for tomorrow but in 2–3 years. Quality > Quantity. As a female in this industry, I look forward to not changing what I’ve been doing right this whole time. Being in an industry that was made for me.

The fox never wins the race, the calculated, patient, strategic and smarter tortoise always does. Men, be a tortoise and women, never be afraid to be slower and more confident in the best way possible because it always ends up beating any strategy in the long run.