Original Article By ALICIA HOLMES – Investor, Financial Educator, CEO & Founder of Journey To Wealth
I’m not one for generalizations, but I’ve been noticing a pattern for a while now, and I am hoping that by calling attention to it, I can help interrupt it.
I was at a fin-tech (financial technology) conference recently, and a group of us were standing around talking. As usual, I was the only woman. One of the men, who worked in sales, said, “I’m not like any of you guys. I really don’t know a lot about finance. But when I talk to my financial advisor, I’m clear that at minimum, I just want to be in index funds.” When I asked him why, he said, “They have low fees. It’s like investing in the market, so I know exactly when my account is up or down. And over time, the market has done pretty well. Plus, Warren Buffet said so!” I remember having been struck, despite his disclaimer, by his understanding of two very significant investment fundamentals – fees and benchmarks.
By contrast, I have a female acquaintance, a brilliant and highly educated woman, who also claims not to know anything about finance. In her case, she has no idea what an index fund is or how to evaluate fees. She completely outsources all of her financial decision-making to a professional advisor.
Now, you might be thinking, “Well, fine. We can’t all be experts at everything. That’s what advisors are for.” And to some extent, that might be true. However, most of us figure out at some point that if we don’t know anything about car repair, for example, an auto body shop could quite easily quote us an unreasonably high price for any repairs we might need. It’s clear that it behooves us to educate ourselves about any of the investments we make.
In the case of my acquaintance, a little education would have gone a long way: She discovered that her financial advisor had given her faulty information and had completely taken advantage of her. The result was profound financial hardship that lasted for years and the loss of a seven figure appreciation of her original investment.
You start to see how every time a woman leaves her money management to someone else, she becomes part of a world where women are not building wealth.
Again, generalizations are tricky. I’m not saying that every woman behaves as did my acquaintance or that every man is as informed as the man I met at that conference. But I have for many years spent a lot of time talking to people about money and this is a pattern I’ve observed over and over again: Women who are otherwise smart, educated, and resourceful tend to totally abdicate responsibility around financial decision-making. It’s as if there’s some block, some force that shuts them down completely. On the deepest level, many women believe that anything having to do with numbers or money is simply not for them!
Of course there is very little in our national culture that tells women that math and finance are, in fact, as much female as male territory. In virtually all media, as in so many other aspects of our contemporary society, white men dominate the narrative — and that is particularly true of the the financial industry. When my daughters were in elementary school, I saw them begin to lose their innate love of math, so I did a significant amount of research that showed the potential reasons for their disengagement. For example, did you know that teachers are more likely to rate girls’ math skills lower than boys’, even among girls and boys who have demonstrated the same level of math proficiency? Not surprisingly, studies show that being underrated in math in turn impacts girls’ performance in the subject. In other words, when we tell girls they aren’t as good at math as boys are, they become less good at math.
There is a great deal of data like this. It’s no wonder that so many of the adult women I meet feel like math — and, by extension, finance — is not for them.
Sometimes it helps to see our behavior as part of a bigger picture. An individual saying, “finance isn’t my thing,” may seem harmless enough; again, we can’t all be experts in everything. But when you take a step back and realize all the ways that we as women are discouraged from excelling at math, and in fields that are fueled by math — and then you consider all the money you might be leaving on the table by allowing someone else to make all of your investment decisions for you — you start to see the problem. You start to see how every time a woman leaves her money management to someone else, she becomes part of a world where women are not building wealth.
My company, Journey to Wealth, helps women of color to become financially empowered, achieve financial freedom, and live the life of their dreams. If you want a partner in your personal journey to wealth, let’s talk.
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