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5 Reasons Women Take a Different Approach To Financial Planning

Whatever you think about inherent differences between men and women, research has made it clear that women face a much different set of challenges than men when it comes to financial and retirement planning.

Whatever you think about inherent differences between men and women, research has made it clear that women face a much different set of challenges than men when it comes to financial and retirement planning.

Of course, comprehensive financial planning is incredibly important for both men and women to plan for a more secure future.

But research and my own experience as a financial advisor for women have taught me that women approach financial planning rather differently than men.

Some of these differences can be attributed to the unique challenges women face, while others may be due to women’s perceived or actual roles in society and their philosophies and values regarding wealth.

So today, I’m exploring specific reasons why women take a different approach to financial planning. Although these may not apply to every woman. In the following topics, I’ll discuss five of the most common reasons I’ve observed through research and during interactions with my own clients.

1. Women Have Longer Life Expectancies

Women are more likely to live longer than men. So not only will many women need to support themselves independently after their partner is gone, most will also need to save more to provide for living more years in retirement. Furthermore, healthcare costs typically rise as you age, so women in their 80s and 90s often have more expensive healthcare needs as well.

These realities mean women must approach their financial planning with an eye for increased longevity and how their increased life expectancy impacts long-term forecasts for their nest egg.

In other words, the pressure on women to save enough for retirement is simply greater than the pressure on men.

This increased demand causes some women to fear or shy away from financial planning, as they’re already conditioned to feel pessimistic or unsure about their outcomes. Therefore, it’s essential that financial planners acknowledge the valid reasons many women have for feeling hesitant about financial planning and their future.

2. The Gender Pay Gap + ‘Pink Taxes’ (Those Pesky Devils)

On top of needing to save more for a longer and more expensive retirement, women today are still grappling with a gender pay gap, despite the fact that significant progress has been made in recent decades. As of 2020, women earn only $0.84 for every dollar a man earns.

Additionally, the ‘pink tax’ costs women more than $1,300 a year on average. The term ‘pink tax’ – while not actually a tax – describes the increased price women pay for products and services marketed to and designed for women. Comparable products and services for men cost less.

Over her lifetime, the ‘pink tax’ combined with the gender pay gap can significantly impact a woman’s big-picture financial outcomes. Unsurprisingly, this combination makes it even more difficult for women to save enough money and reach their goals.

Most women are aware of these inequities and challenges, so financial planners who specialize in serving women should be mindful of the increased obstacles women face in their day-to-day finances.

3. Women Have Unique Investment Philosophies

Research shows that women are more likely to invest conservatively than men, and only 26% of women actually invest in the stock market. This means that women and their financial advisors need to focus on understanding various risks so they can design an investment plan that respects individual risk tolerance while maintaining a realistic approach to women’s needs and objectives.

On the flip side, women who do invest tend to achieve better returns than men. One reason for this may be because women are more likely to be buy-and-hold investors, which many financial planners believe is the best investment strategy for long-term growth.

Women are also more likely to make investment decisions based on their specific goals rather than following whatever’s hot in the market. Men (God love ‘em) can be a bit overconfident when it comes to investing and are more likely to make impulsive decisions. On the other hand, women tend to take their time researching their options before making a move.

4. Women Desire To Put Others First

Additionally, women are known for fiercely loving and protecting the most important people in their lives. So it makes sense that some women may feel inclined to prioritize their children’s or other loved ones’ needs over their own retirement savings.

As a consequence, many women don’t recognize that by putting off their retirement savings, they’re risking becoming an undue burden on their children if they don’t have enough money to live on as they age. If you have to choose, I always like to say that you can take out loans for a college education, but you can’t take out loans for your retirement.

(With that being said, women give more money more often to charities than men, even despite the challenges of the gender pay gap. You go, girls!)

5. Women Focus On Goals Over Numbers

Finally, women approach financial planning differently because they’re more focused on their overall progress toward their goals rather than on specific numbers and benchmarks.

Men get bogged down more easily in trying to analyze and improve each particular holding rather than focusing on the big picture. (This tendency may also contribute to the fact that women who invest outperform men.)

Financial advisors who work with women need to understand and remember women’s preference for big-picture thinking. Rather than focusing on the performance of each and every one of their assets, women want to know on a larger scale what’s working, what’s not, and what they can do to improve their outcomes.

Partner With A Women-Focused Financial Planner

At Better Money Decisions, we are a women-owned, women-focused financial planning firm dedicated to doing things differently. We understand that many of the financial planning needs women have simply aren’t being met by traditional investment managers.

Good financial planning and sound investment strategies can make a huge difference for future financial security.

To see if we can help you take charge of your future by making comprehensive and holistic decisions with your money, I invite you to email me at, or simply click here to schedule a no-obligation conversation with one of our advisors today.

About the Author

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Lorraine Ell

CEO and Senior Financial Advisor

As the CEO and co-owner of Better Money Decisions (B$D) Lorraine is excited to help others solve challenging financial problems. For those experiencing dramatic change such as divorce, retirement, or the loss of a loved one she is a dedicated advisor and acts as equal parts investment manager, financial planner, coach, and personal guide. It’s her mission to help families lead their best financial lives.

Author of the book, Bozos, Monsters and Whiz-bangs: Bad advice From Financial Advisors and How to Avoid it!, Lorraine is also frequently quoted in MarketWatch, Investment News, Investor’s Business Daily, Yahoo Finance, and The Wall Street Journal.