Financial Knowledge Gap: We live in a world of gender gaps; a world where we assume that women are generally better than men in some aspects of life. Even though most of these assumptions are wrong, they become perpetuated through cultural bias until they turn into self-fulfilling prophecies. The latest example of this conundrum comes from New Zealand, where a recent survey revealed that women and men have different mindsets and approaches in terms of investing.
Different Mindsets and Approaches
The survey, which was managed by the Commission for Financial Capability, ran for about six months; it involved 3,000 respondents with a 50/50 ratio of men and women. The goal of the Commission was to gauge how much the average New Zealand resident knows about basic financial principles as well as concepts. The gender gap can be gleaned from the following key findings:
Top Resons of Financial Knowledge Gap Between Men and Women
- Most women understand concepts such as inflation, annual percentage rates, interest, and investment risks.
- Men are more likely to be familiar with slightly more advanced investing principles such as compound interest, portfolio diversification, time value of money, and asset depreciation.
- Compared to men, women are generally less preoccupied with making money; they often cite caring for their families as being a more important aspect of life.
- Men are far more interested in learning about finance and getting into investing; however, they are more likely to take risks that they have learned to avoid.
- When it comes to short-term investing, women are more successful than men, and they are also better at money management. Their rates of return tend to be lower, but they are less likely to accumulate losses.
Similar to other countries that are members of the Organization for Economic Cooperation and Development, the survey showed that the adult population of New Zealand has a pretty good grasp on the basics of personal finance; this is a good reflection on the education system and the efforts made by government agencies as well as financial institutions in terms of educating the Kiwi public.
One preliminary recommendation based on the survey is related to the way parents encourage their children in terms of financial education. In New Zealand, boys are often steered towards learning mathematics and finance while girls are reminded that they should be responsible with their paychecks, savings, and household budgets. The sense of being prudent that many girls possess instinctively could make them smart investors, but they could use some encouragement from their parents and teachers in this regard.