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Thursday, December 19, 2024

This is Women’s Mind about Money in 2024 According to…

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The 2024 Her Money Mindset Survey offers an in-depth look at how women across the United States, spanning various generations and income levels, engage with their finances. The findings shed light on how women think about, discuss, and manage their money, providing valuable insights into their financial behaviors and attitudes.

Debt Dynamics

Debt is a common factor in women’s financial lives. The majority, 67%, report some type of debt. The most common kinds are credit card debt, very closely followed by mortgage debt and car loans. This argues that credit is an important part of many women’s approaches to finance. Probably the most burdensome of these, though, would be credit card debt; the interest rates for this are high, and it can seriously impact both current and future financial stability. Mortgages and car loans are much more structured forms of debt but still require a great deal of management to keep from causing financial strain.

Women living with debt March 2022

Watching Every Dollar

In managing their finances, women are highly attentive to where their money goes. A significant 76% of women keep a close eye on their monthly expenditures, ensuring that they are aware of how their income is allocated. This meticulous tracking reflects a strong sense of financial responsibility and the need to make every dollar count, especially in a landscape where expenses can quickly add up. Additionally, 72% of women are actively saving for short-term goals, such as emergency funds, vacations, or significant purchases. This focus on short-term savings demonstrates a proactive approach to financial security and a desire to achieve specific financial milestones.

Short-Term Financial Goals

Women are practical and long-range when setting financial goals. The most common three-year financial goals identified in the survey among women include retirement, acquiring a car, and reducing or eliminating credit card debt. Saving retirement is a critical priority to most of those it touches on, as it shows awareness regarding the importance of long-term financial security. Another major goal is to buy a car, indicating that women are considering the need for reliable transportation to assist in daily life. Paying off credit card debt is an important action toward lessening many of the financial burdens and improving overall financial health. Most of these goals indicate that women balance immediate needs against future planning in an effort to set up a secure base for their finances.

Spending Priorities

Across generations and income levels, this pattern holds, and women tend to spend the greatest shares of their monthly income on essential expenses. According to the survey, 63% of women’s income goes for necessities like housing, transportation, health, education, and childcare. These are essential costs, non-negotiable expenses that form the backbone of everyday living. Another 20% of their income goes into flexible spending covering discretionary expenses such as dining out and entertainment, personal care. They allocate about 17% of their income to funding goals such as down payments on a home, building an emergency fund, or investing for the future. It means that these people are balancing their urgent needs against their long-term financial goals with caution.

Monthly Bills and Financial Strain

Despite their diligent budgeting and financial planning, many women find themselves stretched thin by monthly bills. The survey found that 64% of women have just under $500 left each month after covering their essential expenses, with an average of $422 remaining. For 44% of women, this figure drops to less than $250. This limited financial cushion underscores the challenges many women face in managing their finances, as even minor unexpected expenses can disrupt their budgets. Furthermore, 54% of women reported struggling to cover at least one type of monthly expense, highlighting the ongoing financial pressure that many women experience. These financial strains can impact their ability to save, invest, and achieve their financial goals.

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Investment Landscape

It’s a key way to build long-term wealth, but just 39% of the women in our survey are invested today. That jumps to 42% for Generation X and older women. For women earning more than $75,000 annually, 58% are invested. These numbers, therefore, acquit the notion that women are shy or underrepresented in the investment world. Rather, the numbers indicate that women are willing to invest when they have the means and knowledge. The data, therefore, underlines the role of age, income, and financial literacy variables that drive investment behaviors and indicates that older, higher-earning women will be more active in investing.

Knowledge Gaps and Investing

Despite the positive sentiment towards investing, significant knowledge gaps hinder some women from entering the market. Over half of the women surveyed (53%) stated they are not invested, yet 10% of these women do hold retirement accounts such as 401(k)s or IRAs. This discrepancy suggests that many women do not recognize these accounts as investments, indicating a need for greater financial education. The primary barrier to investing, cited by women, is the perception of not having enough money to invest. This concern is particularly prevalent among women with lower household incomes, who may feel that their limited resources are insufficient for investing.

What Explains the Gender Gap in Financial Literacy?

Investing Advice

Caleb Silver, Investopedia’s Editor in Chief, emphasizes the importance of viewing investing as a way to pay one’s future self. He advises that even small amounts, such as $50 a month, can grow substantially over time. Starting with simple investments like index funds or ETFs can help women build confidence and watch their investments compound. Silver’s advice highlights the potential for even modest investments to yield significant returns over time, encouraging women to take the first step towards building their investment portfolios.

Barriers to Investing

The major possible barriers that stop women from investing are fear and uncertainty. Of those not invested, 29% are afraid of losing money, while 25% contend that they do not know where to start. Some 22% of them do not trust the market, and 9% do not think that investing is important. More notably, women who have higher household incomes are more likely to mention a lack of knowledge or fear of loss as their major reasons for remaining outside the investment circle. This means that even women who are able to afford it develop a psychological block towards investing, and therefore there is a need to educate and rally support in order to help them overcome their fears.

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Growing Curiosity

Despite these barriers, there is a growing curiosity about investing among women. Nearly 1 in 4 women expressed a desire to learn more about investing, signaling a potential shift towards greater financial engagement. This curiosity suggests that with the right resources and education, more women could become active investors, taking control of their financial futures.

https://www.investopedia.com/financial-advisor/women-and-great-wealth-transfer

Generosity and Financial Support

One of the standout findings from the survey is the extent to which women act as financial supporters. An impressive 67% of women surveyed have provided financial support to someone in their lives, with this rate increasing to 73% among younger women. This support ranges from covering significant expenses to smaller acts of generosity. For example, almost all women reported that they would pay for a friend’s meal on an ordinary day, with the average cost of such a meal being $24. This demonstrates a strong sense of generosity and financial support within women’s social circles.

Talking About Money

Women hold a variety of different attitudes and behaviors when it comes to discussing money. On aggregate, 70% would discuss money with their friends at least some of the time, although millennials and Generation Z, and those above household incomes of $75,000 are far more likely. Discussing money with friends may cement bonding and supports around a subject like budgeting and planning for the future. One in three women have even discussed investment decisions with their friends.

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But while having these discussions can bring their friendships closer, only a minority of these women really open up and share much about their personal finances. Just 51% of the women who discuss money matters with their friends share much about their personal financial situations. Among those staying mum, the reasons differ. The majority, 54%, don’t think it is appropriate to discuss money with friends. This happens more often among Gen X and older women. The younger the woman, the more likely she is to avoid these conversations because they make her feel awkward.

Barriers to Money Conversations

Income differences and varying financial situations play a significant role in why some women avoid discussing money with friends. Fear of judgment and shame are common, especially among women with household incomes below $75,000 and those in different financial circumstances than their peers. These feelings can lead to lies or omissions about financial matters. The survey found that 40% of women have lied to their friends about earnings, debt, or their financial background, with 1 in 4 women admitting to lying about their debt. These findings highlight the discomfort many women feel in sharing their financial realities with friends.

Confidence in Financial Decisions

But despite challenges brought about by tight budgets, knowledge gaps, and uncomfortable conversations, women are taking the helm of their finances. A majority of women, even with these behind their back, turn somewhat or definitely confident in their ability to make good financial decisions—58%. And those numbers grow when we look at age and income levels. Forty percent of women feel they are more financially prudent compared to their friends in managing their finances, and 36% are more skilled than their partner who can make better decisions.

Managing the Next Decade of Women’s Wealth

The survey also identified that 39% of the women independently seek information about financial aspects at least monthly, which increases to 48% when it comes to millennials and women of a younger generation. The survey identified that the major ways are financial information websites, online searches, and discussing with friends and family. This only means that such learning proactive behavior certainly attests to a commitment to the enhanced improvement on one’s financial knowledge and decision-making capability.

Conclusion

The 2024 Her Money Mindset Survey offers a comprehensive look at the financial behaviors and attitudes of women in the U.S. Women are not only generous and supportive in their financial dealings but are also increasingly confident and proactive in managing their finances. While discussing money with friends can be challenging due to feelings of judgment and discomfort, there is a clear trend towards greater financial literacy and empowerment. By continuing to seek out financial information and support from their social circles, women are well-positioned to achieve greater financial security and independence.

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