Women trump men in money management, says study

Women have stronger money management skills than men in areas such as everyday financing and planning, but struggle around more complex financial concepts, according to results of the latest MasterCard survey on Consumer Purchasing Priorities - Money Management.

Respondents across seven Asia/Pacific markets were questioned on their ability to handle everyday budgeting, keeping track of expenses, paying bills on time, knowledge of compound interest, and whether paying minimum amounts on unstructured loans such as credit cards was a good idea.

The survey polled consumers on various aspects of financial literacy such as their basic money management skills, investment knowledge and financial planning. It was conducted from 15 March to 27 April 2011 and involved 4,359 consumers from the seven markets.

Data collection was via Internet surveys, personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary.

According to the survey, women scored better than men in most markets when it came to tracking expenses regularly, but trailed when it came to understanding investments and inflation compared to their male counterparts.

Chinese lead

Results showed that both men and women were adept at budgeting for their everyday finances—eight out of 10 respondents overall said they could handle budgeting. The survey also found that women believed it unwise to only pay the minimum amount for unsecured loan facilities such as credit cards, led by New Zealand (76 percent women vs. 73 percent men) and Hong Kong (76 percent women vs. 66 percent men).

Survey findings revealed a generally weak understanding of the concept of compound interest across most markets, with the exception of Chinese women who had the highest score (47 percent), followed by Chinese men (37 percent), and Japanese respondents (men, 33 percent; women, 30 percent). Women were found to be more money conscious and better at keeping track of their spending more regularly than men. Women in both Australia and New Zealand (76 percent of respondents) were especially systematic account keepers.

Women also edged ahead of men in their prudence, with Taiwanese women leading in regular savings (96 percent women vs. 92 percent men) and the belief in having three to six months’ emergency cash savings. In a majority of the markets surveyed, women also showed up as being more financially prepared in taking out insurance for anything unexpected, led by Taiwan (92 percent women vs. 89 percent men).

Men understand more complex concepts

Survey questions about more complex financial concepts—such as understanding inflation or investment—favored men, with a significant proportion of women unable to answer or answering incorrectly when questioned about the concept of inflation. In Japan, 65 percent of the women did not know the answer or answered incorrectly, compared with 49 percent of men, with Australia a close second from the bottom (63 percent women vs. 49 percent men).

Similarly, women did not have a clear understanding of whether single company stocks provide safer returns than a diversified stock portfolio. Across seven markets surveyed, on average 63 percent said they did not know or answer incorrectly on whether a single company stock portfolio was better than a diversified one compared to 57 percent for men.

Education programs

Georgette Tan, vice president, Communications, Asia/Pacific, Middle East and Africa, MasterCard Worldwide, says: “It is very encouraging to see that women have a good understanding of how to manage everyday finances, and are responsibly thinking about finances for the future. However, the fact that they still do not have a clear grasp of inflation or investments might affect how prepared they are for the future.”

Tan continues: “Given that women in many countries play a very important role in helping direct the flow of finances in their household, it is imperative that they better understand these concepts.

That is why MasterCard runs various consumer education programs targeted at women across Asia/Pacific, Middle East and Africa that aim to impart various aspects of financial literacy.”

The survey also revealed that while women are also more conscious about where their dollars go—and are better at keeping track of their spending regularly (63 percent of women versus 60 percent of men across all seven markets), more men regularly monitor their investments than women (62 percent of women vs. 69 percent of men across all seven markets).

Across the region men are also more cognizant of how much funds they will need at retirement (36 percent of women vs. 40 percent of men across all seven markets); though both genders are strongly in favor of having a financial plan (78 percent across all seven markets for both genders).