The latest Disposable Income Index (DII) published today by ISA provider Scottish Friendly reveals a stark contrast in the level of confidence between men and women when it comes to money matters, while also highlighting a clear difference in their approach to saving and investing.
The new report found less than one in three (31%) women say they are very or extremely confident when it comes to managing their finances, compared to nearly half of men (46%) – see figure 1.
These contrasting attitudes can be clearly seen when comparing the reasons for not putting money aside in stocks and shares ISAs, which are used by 25% of men and only 12% of women. For men the most likely reason is they are waiting until they earn more money (20%) followed by a preference for the security of cash ISAs and bank/building society products (17%). The most common reason given by women was that they were afraid of losing money (20%), followed by a lack of full understanding (18%).
The quarterly report, compiled in conjunction with leading think-tank the Social Market Foundation, shows that the median UK household has £1,105 left each month after paying for absolute essentials of housing, energy, water and a broader basket of goods including groceries, transport, childcare and broadband internet. These goods are required to play a full role in modern society. Money left at the end of the month is available for other key items like clothing, furniture and savings as well as luxuries like holidays.
At a time when the vast majority of cash ISAs, if not all, are offering returns below the current rate of inflation (3%), women could be losing out on the prospect of potentially greater returns from stocks and shares due to a fear of investing. Currently, a far higher proportion of men (25%) invest into stocks and shares ISAs than women (12%) but there is very little difference between genders when it comes to cash ISAs.
Furthermore, over the past 12 months, 30% of men have opened a savings or investment product for the first time, compared to just 23% of women. The findings also reveal that the purpose for saving and investing, and the vehicles they use to do so, differ greatly between men and women. Men are more likely to be saving into a pension (36%) than women (23%), while women place a greater priority on saving or investing to help buy a house (12% compared to 6%) or to put towards a holiday (14% compared to 11%) – see figure 2 and 3.
Calum Bennie, savings expert at Scottish Friendly, says:
A lack of confidence when it comes to money matters is very often down to a lack of knowledge or understanding. These figures are particularly worrying as this seems to be an issue for large swathes of people, particularly women, which is impacting their approach to savings and investments.
Taking a long-term view of your finances is incredibly important to building your and your family’s financial future. Although discussing finances with your other half or making arrangements for yourself may not be as exciting as planning your next travel trip, taking the time to talk about money matters, which should include considering your attitude towards stocks and shares investments, could potentially be one of the best investments you’ll make.
The value of your investments can go down as well as up and the value of the original investment is not guaranteed.