Gender differences in the way people deal with money have long been assumed. Now, for the first time, an Australian study has investigated why women make the financial decisions they do, and the findings could have a lesson in them for policymakers wanting to improve financial literacy among women.
The qualitative research, conducted by RMIT and released today as part of MoneySmart Week, shows the significant influence of family and relationships in most women's approach to personal finance.
"Our research confirms that gender very strongly shapes financial decision-making and wellbeing," says Professor Roslyn Russell of RMIT University. "We also found a striking consistency in the approach to money that women had even when they were from different generations and cultural backgrounds. This suggests gender is a greater factor in financial decision-making than many other factors which are often given equal weighting."
The study, led by Russell, focused on the factors that underpin or influence how women make decisions about money. It found that childhood experiences play a significant role in shaping women's views about money and that "providing for children" was the most common significant factor in financial decision-making.
It's important to understand why women make the decisions they do because women are significantly more likely than men to spend the last third of their lives in poverty. Women are retiring with a little more than half the super balances held by men; 75 per cent of the people on the single age pension are women. So women need to be planning for themselves, not just for their family.
Russell says finances were inseparable from women's emotional journeys and the relationships held with family, partners, children and friends.
In particular, negative outcomes of decisions made by a spouse had lifelong consequences in how women viewed money and made financial decisions. "Several women allowed all large financial decisions to be made by their partner or spouse, and in many cases this put them at significant disadvantage," Russell says.
In recent times, the reaction by government, industry and community sectors to the problems of financial hardship and financial exclusion has been to provide more financial education. However, Russell says the research suggests that, for women, this may not be the answer.
"Having information or knowledge wasn't enough to motivate women to make changes to their financial management habits," she says. "The major motivation for seeking financial education or information was to provide a more comfortable life for their families.
"So it strongly suggests that low levels of financial literacy can be a factor in financial hardship; however, it may not be the cause or the complete answer."
Rebecca Glenn is campaign director of MoneySmart Week, moneysmartweek.org.au.