• Miss Money Box

Talking to women about money

As you may know, I’m currently undertaking a PhD (yikes!) where I’m looking at the relationship between women and money. Specifically, I’m looking at what drives women’s financial decision-making and how that relates to their approach to investing within superannuation. Sure, it’s not everyone’s idea of a good time, but it sure is mine.

I’m exploring this through the lens of psychologist Albert Bandura’s sources of self-efficacy. “What is self-efficacy?” I hear you ask. Well, it’s a person's belief in their own capability to organise and execute the actions required to manage prospective situations.

I’m focusing on the following three sources of self-efficacy:

  1. Mastery achievement - having success in mastering a task

  2. Vicarious experience - our observation of people around us

  3. Verbal persuasion - being persuaded that we can master certain activities.

20 interviews over four months

As part of my research, I conducted 20 one-on-one interviews with Australian women. We talked about their financial influences, their history with money, their approach to risk and their interest in investing and superannuation. It took me four months and I really enjoyed it - though I have to admit that typing up the transcripts was not my favourite part.

I asked for research participants via this blog and my Facebook page, and I have to say I was so surprised by the number of women who not only got in touch with me, but were also willing to spend an hour or so of their time sharing their thoughts.

I spoke to women aged 25-39 from a range of ethnicities and socio-economic backgrounds from all over Australia – and even some Australian women currently working overseas. And while the results are de-identified, I was really humbled by the candour in which they revealed their experiences, concerns and ideas about their financial situations to me.

What did I learn?

While it’s still a work in progress, I can say that some women think about money a lot, some don’t. Some are investing in the stock market, others view buying a house as their financial priority and some are just getting by.

My initial analysis shows that vicarious experiences – especially negative vicarious experiences, have a strong influence on financial decision making. A large number of participants - 60% in fact - referenced a significant negative vicarious experience which impacted the way they now make financial decisions.

Such negative vicarious experiences included things like seeing your parents lose a lot of money in the share market leading to a distrust of investing or seeing your grandmother end up with nothing in retirement due to divorce later in life leading to working towards financial independence from a partner very early.

Verbal persuasion is also a strong influence on financial decision making, but source credibility of the verbal persuader plays a significant role. What I mean by that is If you’re being persuaded that you can master a financial decision, you need to respect (and even like) the person who is telling you.

This verbal persuader usually has to be a close family member or friend, or someone you deem to have expertise in the area. This includes influencers like the Barefoot Investor (Scott Pape came up an extensive amount of times during interviews) as well as finance podcasters, journalists and bloggers.

Some personal reflections

While I write about the importance of saving, having an emergency fund, investing your money and contributing extra into your super – these are not options available to everyone. There are so many people out there that are more concerned with the day-to-day, rather than some day.

Talking to some of these women really opened up my eyes to my own level of privilege when it comes to money. I come from a blue-collar, working-class family. I was lucky enough to have parents who made an effort to talk to me about money, to show me how to budget, how to pay bills and the importance of not having debt. What I’ve learned is that not everyone has had this experience and it can have a huge impact on your financial decision making through life.

To all those who participated, a huge thank you. What I've learned (and will continue to learn) is invaluable.