Why do many women feel uncomfortable discussing and controlling their finances?
At The Story Exchange, we believe that a woman who is in control of her finances has the power to assert herself in many other areas of her life. And through our 1,000 Stories campaign, we have celebrated hundreds of women who took responsibility for their financial and personal destinies via entrepreneurship.
However, through the anecdotal evidence we’ve collected, we have observed a frequent reluctance from women when it comes to discussing money. This hesitance manifests itself not only when some women talk about the present financial state of their companies, but also, when they express — or rather, decline to express — the desire to earn profits from their work.
In short, despite the level of accomplishment many female entrepreneurs achieve, when money enters into the conversation, women tend to clam up.
It’s a phenomenon that several teams of researchers have observed through multiple studies about the relationship between women and money.
- The 2013 Allianz Women, Money, and Power Study indicated that a fifth of all women “just want someone else to do [their financial planning] for them.” The majority of those who participated in that study also referred to financial matters as “hard to understand and dull.”
- One study conducted at the Harvard Business School found that, while 57 percent of male Carnegie Mellon University MBA graduates negotiated their salaries, only 7 percent of female graduates from the same program did so as well. The study also indicated that the salaries of male MBAs were, on average, 7.6 percent higher than those of the women MBAs.
- When it comes to handling money at home, a 2012-2013 Prudential study found that female breadwinners were half as likely to feel prepared making financial decisions as their male counterparts – 23 percent of them experienced confidence in the driver’s seat, as opposed to 45 percent of men playing the same role. Women were also twice as likely as men to describe themselves as “beginners” in finance.
- In regards to women business owners, a collaborative study by Babson College and Goldman Sachs found that the salaries of female entrepreneurs surveyed were approximately 20 percent lower than the salaries male business owners paid themselves. We previously wrote about this particular matter here.
- The Kauffman Foundation found in a study that men were more likely to secure venture capital and angel investment funding for their startups than women, who were more likely to use personal savings and contributions from business partners. Researchers also found that men were more likely than women to cite building wealth as a primary motivator for starting a business.
Victoria Wang, co-founder of The Story Exchange, observed the same lack of fiscal confidence in women during her years in the finance world. When she spoke about the issue for this project, she observed that the problem is “not just about female entrepreneurs — it’s about females, period.” Research on the topic seems to corroborate her point.
Through this effort, we wish to explore this phenomenon on a deeper level — to examine the generational, cultural, racial and socioeconomic influences that might contribute to this discomfort, and to discuss the importance of being forthright about one’s fiscal needs and goals, especially as an entrepreneur.
To be sure, many entrepreneurs — female and male alike — prefer not to disclose the particulars of their companies’ finances for reasons unrelated to this issue, particularly those who are just starting up. We are, however, specifically focusing on the discomfort that exists beyond that distinction.
We have spoken with several female finance experts for this project. They each noted such feelings of hesitance and discomfort with money in some the women with whom they have worked. We asked each of those experts to talk about their experiences with us, as well as their thoughts on why women feel disconnected from financial matters.
The result is a fascinating and diverse look at the complicated relationship women have with managing money. Follow along as we explore this pressing and prevalent issue.
For all posts from this project, please click here.
Posted: June 2, 2014