Does Gender Play a Role In Money Management?


As much as we’d like to believe the world to be a changed place that has transcended condescending traditions that have overstayed their welcome, gender equality is still far from being a pervasive influence on all sections of society. Society at large is still primarily patriarchal, and even in progressive urban cultures, there is some form of diluted gender bias when it comes to identification of an individual’s competence in a race for resources and job promotions. Even in a multi-ethnic, all-inclusive country like Singapore, there is a veritable gender identity crisis, especially when it comes to the topic of managing finances.

You’d be surprised to know that such ramblings are not merely speculative anymore because numerous scientific studies have concluded that gender differences do play a significant role in determining the negotiation and management tactics related to money.

In a study conducted by the Babcock organization, it was found that full-time working women usually end up earning only 77% of the income earned by their male counterparts. However, when factors like profession type, educational qualifications and maternal leaves are taken out of the equation, it turned out that women only earn 11% lesser than men with equivalent credentials.

In another study conducted on 153 volunteers that tested the negotiation prowess of subjects, it turned out that that only 58% of women bothered to follow through with hard-nosed negotiation of potential earnings as compared to 83% of men. A more pragmatic test study done on newly graduated master’s degree students who had the option to accept or negotiate the starting salary package put forward to them by a company revealed that men were four times more likely to push for a negotiation. Unsurprisingly, those who proved to be wily bargainers ended up earning 7.4% more than their competitors over an extended period of time.

While this can only make a shallow impact on their initial earnings, it can have a deep, resounding effect on your future earnings in the long-term. For example – a man who successfully hikes his initial salary offer of $25,000 to $30,000 as opposed to a woman who willingly relents to the originally offered sum will end up earning nearly $362,000 more than her after a period of 28 years after factoring in the annual 3% salary raises for each of them.

The conventional interpretation of this behavioral disparity when it comes to salary negotiation relates it to the naturally aggressive and testosterone-fueled competitive nature of men when it comes to a battle for resources. Women on the other hand, are traditionally brought up to be less assertive and are ingrained with a mindset that teaches them to be settlers instead of negotiators by nature.

Although this reluctance can cost women dearly in their financial aspirations, part of their jaded perspective can be attributed to how both men and women share a tendency to look down on women who ask for more and unfairly judge their demands to be “rude”. Even in a working environment, several male professionals preferred to work with women who did not show a high degree of assertiveness and exhibited discomfort at the prospect of working under a female boss.

However, the male obsession for superiority in the workplace is also the reason why women consistently outdo them when it comes to investment returns. Social scientists have carried out studies that concluded that money management is a skill where women can easily match up and even outshine their male counterparts. The testosterone-fueled competitive streak in men drives them towards high-risk high-reward investments and potentially become victims of their own ego when they incur losses.

Women on the other hand, put more emotional investment into their financial portfolio and approach their finances with a nurturing outlook. Hence, they tend to be a lot more vigilant and proactive at overseeing the status of their investments and their position in the market, which means they show a natural proclivity towards risk-averse investments.

Female money managers consistently outperform their male counterparts, and social scientists say this unbalanced power dynamic is one reason why. But, they add that eventually, as the power balance evens out in the workplace, women may lose some of that edge. A recent case study demonstrated that female-owned hedge funds outperformed the overall hedge funds market by over 6 percentage points.

The key inference to note from the above examples is how big a role the perception of power can play in damaging the decision-making skills of people. People who emerge from dominant groups share the common delusion that they are better equipped at predicting the future than others, which makes them less attuned to forming contingency strategies in case of a negative outcome for their finances.

As society evolves and breaks free from the shackles of these gender norms, leadership in the workplace as well as at home will become a lot more balanced and productive. A fully inclusive and gender-neutral society is the only way to mitigate any performance discrepancies that have come from outdated traditions.

For more financial tips and tricks to optimize your financial lifestyle, visit and learn all the best moves to make with your money.

What do you think?