MARS AND VENUS... WITH THE CHECKBOOK

Neal A. Deutsch, CFP^® and Elizabeth F. Deutsch, Sr. VP

Published in Rivertown Journal, May 2007

We recently had a couple into the office, which led to a long conversation about how men and woman view their finances and how it affects their relationship. I am proud to share my by-line this month with my wife and partner, Elizabeth, who specializes in working with women in our firm. Actually, I can’t take credit at all… she wrote this month’s article. Enjoy!

Men are From Mars-Women are From Venus is a book by Dr. John Gray, depicting the vast differences in how men and woman think and react to different situations.

Ladies: do you agree with the cultural belief that a man who loves a woman must take care of her, which too often, means making a lot of money, which can put a lot of pressure on a man?

Gentlemen: do you include your wife/girlfriend/partner in the day-to-day managing of the household money? If not, this is an insecurity that can be brought on by another cultural belief that has been carried on for way too long - that woman are incapable of managing money. Unfortunately, women who buy into this stereotype usually become complacent and don’t participate in the financial issues, which includes learning how to invest.

Women who believe this myth wind up being less successful financially then their male counterpart. Not only are they still paid less than men, but they also may live in fear of losing the little they have. Men who are unwilling to share the financial decision making process find themselves carrying the burden of financial responsibility they might not always be up to handling.

There are some vast differences in how men and women view financial decisions, notes psychotherapist-consultant-author Olivia Mellan:

• Men tend to take credit when they make money, but blame others if they lose it

• Women credit others when they make money, but blame themselves when they lose it

• In fights about money, the man blames the women while the woman blames herself, but then may resent the man

• Men tend to be uncomfortable discussing investment decisions with spouses

• Women almost always go to spouses with financial issues

• Women feel they need to discuss and plan financial moves more than men do

Women tend to select to safer and more secure investments. As a result, in a down market they may lose less. But too frequently, they’re afraid to take the risks necessary to make more money long term.

Put some of these issues into a relationship, and there sure are a lot of reasons for couples to fight!

Well, until now, you might not have realized the impact that your thoughts about money could have on your personal relationships or marriage. However, apart from the personal issue, there are investing issues to consider.

I mentioned earlier that women tend to be less comfortable taking investment risks—a factor that hurts their ability to earn more money long term. Men, on the other hand, are more inclined to take risks—sometimes without completely understanding the risks they are taking.

Nevertheless, history has proven that people willing to take some risks and invest in stocks or stock mutual funds for a term of at least 10 or 20 years tend to make more money than more timid investors. The trick—for both men and women alike—is knowing when and how to take such risks.

The key to investing is understanding your investments and balancing the investment risk with the amount of risk you can personally tolerate. You also need to remember that keeping all your money in CDs or savings accounts, while not as risky as the stock market, also presents a risk of its own. That risk is your money may not grow fast enough to keep pace with inflation, the price increases in your everyday living expenses, called inflation risk, or loss of purchasing power.

If you’re having a money conflict, keep in mind basic differences between men and women. Each style is neither right nor wrong; they are simply different. Keeping lines of communication open is crucial to navigate these waters. Vive’ la difference!

Neal A. Deutsch is a Certified Financial Planner^™, Registered Securities Principal and President of Chestnut Investment Group in Suffern, NY, helping people with financial planning since 1984. Please feel free to call Neal at 845.369.0016 or email him with your questions at neald@chestnutinvestment.com Feel free to visit his website at www.chestnutinvestment.com