Women, men and money

When it comes to managing money, women worry a lot more than men do—and women are more likely to ask for help with their money problems.

That's the gender gap described in a recent report by Financial Finesse, a firm that operates a financial planning helpline as an employee benefit for large companies.

Among the findings: only 53% women say they have a handle on their cash flow and spend less than they make each month. By contrast, 71% of men made that claim. Only 36% of women say they regularly pay off their credit card balances in full, compared with 61% of men.

During that same period, Financial Finesse received more than twice as many helpline calls from women as from men—68% vs. 32%. More than 40% of the calls from women concerned debt problems, according to the study, compared with 36% for men. And nearly 30% of the debt-related calls involved urgent financial issues, such as foreclosure and bankruptcy.

The same gender gap can be seen when it comes to investing. Four out of 10 women say they have a general knowledge of of stocks, bonds and mutual funds, vs. 73% of men. And only 24% of women feel confident that their investments are appropriately allocated, compared with 40% of men.

So are women simply less capable than men when it comes to handling money matters? Not necessarily. Women were just as likely as men to agree that they contribute to their workplace retirement plan (86% vs. 85%). And only one third, about the same as for men, said they were uncomfortable with the amount of (non-mortgage) debt they held.

Perhaps the real issue is confidence. A 2006 survey by Harris Poll for Charles Schwab found that 48% of women, twice as big a percentage as men, agreed that "investing is scary for me."

Yet despite this lack of assurance, women often do better job of investing than men. As a 1999 study (pdf) by finance professors Brad Barber and Terrance Odean found, women's risk-adjusted returns have beaten men's by one percentage point a year. The key reason: women trade less frequently and hold less risky portfolios, Men, by contrast, tend to be overconfident, which hurts their performance.

And despite their doubts, women, more often than not, are the ones managing the money in their households. Some 60% of women say they are responsible for budgeting, bill paying and day-to-day spending, according to a 2006 survey by Money, although more men claim responsibility for investing and retirement planning decisions.

But with experience, and a higher income, women's financial confidence and responsibility grow. Among women with portfolios of $100,000 or more, some 63% say they are the CFO of their household and make the majority of financial decisions, according to research by Citibank's Women & Co. program. And some seven out of 10 agree that they are knowledgeable about finances and investing

That said, women do need to be concerned about their finances in ways that men don't. That's because they still face a gender income gap, with women earning less than men on average. Women also face the challenge of financing a longer retirement on that lower income, since they tend to outlive men. Poverty rates among older women are twice as high as for older men, according to AARP.

So the lessons for women are clear: take charge of your money, and unlike men, don't be afraid to ask for directions when you need them.