Gender as a key determinant of differences in household finance behavior

Gender as a key determinant of differences in household finance behavior

Gender is a social, historical, ideological and cultural construct that leads to an understanding of the different economic outcomes for both men and women. This construct largely determines how financial decisions are made and the responsibilities held by either gender. Gender roles are not only reflected in the household setup but are also constructed here. There are many aspects of gender roles that determine the spending and saving patterns of many households (Bonke et al 2007). The division of labor and the specific responsibilities for distribution of resources are some of the major determinants of financial wellbeing in the household. There are thus distinct financial responsibilities and decisions that are a reserve of either gender. The gender roles assigned by societal norms and expectations are important as they determine the biological ways in which men and women ought to behave, and delegate the responsibilities of financial planning either gender.

Financial experts assert that despite the litany of literature and the overexposure of people to financial material as a direct result of education, and despite the fact that management of resources has been simplified over time, people rarely speak about their money. Thus, differences arise in the way that they spend it largely influenced by their perceived needs and priorities. It is a fact that men and women spend money differently. Americans are said to primarily model their spending patterns after the observed behavior of their same-sex parent. Many factors have come into the fore in attempting to breakdown these money paradigms but their effects have barely scratched the surface. One of the widely touted facts about money and gender is that women seek acceptance in their spending patterns and usually seek to create a lifestyle in the way they spend. Thus, women are wired towards spending on things that enhance day-to-day living making them now-money oriented. Conversely, men are wired towards provision and fixing in their spending patterns. They are said to be more interested in capturing value than in the actual purchasing process. As such, men are more prone to investing and usually acquire something because they need it rather than want it. This makes men future-money oriented. These generalizations may not capture the detailed behavior of all men and women but nonetheless indicate a trend that is observable in the society today.

Women are considered as being influenced by the creation of a befitting lifestyle and in children which naturally influences their spending patterns (Iversen 2003). On the other hand, men are interested in investing in value-adding objects. Thus, while women spend in a way that makes their day work, men spend on things that will enhance their status. The difference between both stances is that women spend on things that have no asset or visible value. Experts say that these predispositions of either gender are exemplified in the way that Americans behave in shopping malls. Women become more embroiled in the shopping process and will want to spend on what they think expresses their view of themselves. On the contrary, men just purchase what will work.

The financial world has been male dominated for a long time but this is slowly changing with more women coming into the fray. There are distinct differences in the way that either gender thinks and learns about finance. While both genders may enjoy interacting with others, men prefer to make their financial decisions autonomously and independently whereas women seek for connections with others in interaction and chemistry. Studies in the differences between male and female anatomy indicate that while men are more localized, efficient and specialized at focusing on singularities, women integrate, connect and distribute. Women thus have the capacity to think holistically by pooling information together.

Community initiatives in many societies aimed at empowering people to invest in groups have achieved more success among women than they have in men. Men have been found to be more interested in relating with their friends in ball games, fishing and golfing activities than in financial matters. This fact has empowered women to be better at investing their finances on proven profitable ventures through discussions, comparisons and swapping of scores. Men are more wired towards competing than cooperating. Women have been found to also be interested in earning more by competing with others. However, their main interest is always cooperating so that they can collectively reach their goals (Lyngstad et al 2011). The cooperative strategy is thus more suited to women than it is to men. This fact was put to the test and it showed that women’s brains light up under MRI scans when they cooperate with others. It is thus a biological fact that women love to help each other.

Most household financial decisions are made by men. While there are many positive tenets about men being responsible for investing for a family’s future, one distinct negative stands out. Scientific studies have shown that men produce large quantities of adrenaline when they are under stress. On the contrary, stress makes women produce oxytocin which is a hormone responsible for seeking closeness and interactions with others. When women have made a bad decision, they are much more likely to recover faster than men since they seek the support of others while men suffer in silence. In times of scarcity, women have been found to be better financial managers than men. This is because they have support structures that help them in determining the priority areas of investment.

Numerous researchers have shown women to be more investment-risk averse than men. They have also indicated that women trade less, are less engaged in decisions on investments and put priority on investment goals that are geared towards the satisfaction of family and community needs rather than those of themselves. A study by Merrill Lynch Wealth Management indicated that in many instances, men and women are more alike than other researches prove. However, there are fundamental differences in the way that either gender perceives its position in investment. Men think that they have more financial knowledge than women (Dema-Moreno 2009). This means that a man is more likely to make an investment decision without sufficient information due to belief in his own capacity. On the other hand, a woman is likely to be more cautious as she will admit that she possesses little knowledge and thus will seek support.

Women and men are differently wired both biologically and socially. The different factors that each values over the other greatly influences the financial decisions they are predisposed to make. While women are more risk averse in investments, they are more likely to spend on goods that do not add asset value to their overall livelihoods. On the other hand, men are less risk averse but are more cautious in their spending patterns meaning that they are more likely to spend on things that add asset value to the lives. Gender is therefore a key determinant in household finance behavior.




Bonke, J. et al, 2007, “Intra-Household Specialization in Housework in the United States and Denmark”, Social Science Quarterly, 89(4): 1023–1043.

Dema-Moreno, S., 2009, “Behind the negotiations: Financial decision-making processes in Spanish dual-income couples,” Feminist Economics, 15(1): 27–56.

Iversen, V., 2003, “Intra-Household Inequality: A Challenge for the Capability Approach?” Feminist Economics, 9 (2-3): 93–115.

Lyngstad, T. et al, 2011, “Pooling of Economic Resources: A Comparison of Norwegian Married and Cohabiting Couples,” European Sociological Review, 27(5): 624–635.

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