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Women make better financial decisions

By Staff Writer

Women are often accused of being spendthrift but new research shows that they make better financial decisions than men. A recent report from Barclays Wealth and Ledbury Research showed that women are increasingly rising to senior positions in their professions, managing companies or running their own businesses, and generally taking more control of financial decision-making.

 

According to Henry van Deventer, head of business development at acsis, research has shown that women are proving to be better investors than men. Van Deventer explains that this stems from men and women perceiving risks differently due to the differences in their emotional responses.
 
 

“Men and women both have different priorities. While men look for financial security when planning their future, women will seek financial well-being. Men will look for an opportunity to get rich and by doing so are likely to be more confident and make hastier decisions. Women on the other hand tend to see wealth as a source of security for their family and as a result will take fewer chances with their money. For this reason, women investors are outperforming their male counterparts,” says Van Deventer.
 
 

He added that how individuals make decisions is also hugely dependent on what drives behaviour. Different people, based on their inherent characters or personalities are either more left or right-brain oriented. The same is also true for genders. “The different sides of the human brain drive behaviour in different ways. The left side of the brain is the analytical side which processes facts, figures and new information and does deductive reasoning. The right side of the brain is the intuitive side and is the relational, sensing, feeling and risk taking side of the brain.”
 
 

Van Deventer says that women tend to be more right-brain oriented, where men are more left-brain oriented. “Women are not as egotistical and are less over confident when making decisions. Women will also likely be more consultative and gather a lot more information before making a decision instead of making a rash decision. Women will also look at money in a more meaningful way and are more emotive with the way they allocate their money, whereas men tend to be more critical.”
 
 

He added that men and women have different approaches to how they invest. He said that men are more likely to make frequent risky investments hoping to get a good return, whereas women tend to invest less frequently and instead opt for less risky investments with low returns and are willing to wait for long-term returns.
 
 

He says that while it is positive that women are stepping up to the financial plate, it is also necessary. “Women face greater financial challenges than men as they generally live longer and often earn less over their lifetime. Without proper planning, this can equate to problems in their financial future.
 
 

“While research has shown women are better investors, it is important to still put a framework in place in order to be very clear on what financial planning means for you, whether it be financial security or well-being, and to understand what you need to do in order to reach the goals. It is also of utmost importance for females to constantly review their financial plan, as it is the only viable method of securing long-term financial security,” concludes Van Deventer.

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