financial confidence

Written By Kelley Holland

Wouldn’t it be great if we could pinpoint when women start to feel less confident about their finances? After all, we know that women have lots of healthy financial habits: they are smart, patient investors, and they save a larger share of their paychecks for retirement.

But somewhere on the path to independent adulthood, many women start to lose confidence in their financial smarts – even as men think their financial acumen is increasing. And women’s lower confidence can trip them up in any number of ways.

That’s why I was glad to find the latest wave of a long-term study exploring financial confidence. The APLUS study was conducted in several waves over more than eight years, and measured the progress toward adult living of a group of students at the University of Arizona. When the study began, they were just beginning their college careers; in the latest survey, they are aged 26 to 29. Some own homes, some have children, most are working – in short, they have many of the markers of adulthood.

In the first wave, more women than men planned to earn an advanced degree, and they spent more time studying than their male counterparts.

By the fourth wave, though, women were operating at a disadvantage. Some 45% of the men were earning over $60,000 a year in the fourth wave of the survey, compared to 27% of the women. Perhaps not surprisingly, men were also paying off their student loans more quickly, and were more optimistic about completing the task on or ahead of schedule.

In addition, men consistently rated themselves as more knowledgeable, and in the fourth wave of the study their assessment actually increased  – while women’s decreased.

Now, the researchers did not draw connections between these findings. But honestly, doesn’t it seem kind of logical that they’re related in some way? Think how you would react if you studied harder than the guy who sat behind you in Econ 101, and now he’s earning a whole bunch more than you. If you know he is further along in paying off his loans, even though you’re trying, what effect would that have? Would you rail against the system? Or would a little part of you wonder if maybe, maybe, you were lacking in some way?

No question, the gender pay gap can’t explain all of the gender differences this study unearthed. And the pay gap itself is a thorny problem with many causes.

Still, I suspect we would do well to help the women and girls in our lives become better, more confident negotiators. We would do well to ensure that both men and women receive financial education, in terms that are relevant and meaningful. We would do well to take steps to help young men and women launch their adult lives with equal chances at success.


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