Financial knowledge is extremely important. We definitely need more financial education. But financial knowledge does not automatically lead to financial action. As science shows, financial knowledge and financial action are correlated, but there is no causality. This means that more financial knowledge can lead to financial action. Conversely, financial action can also lead to more financial knowledge because the topic is dealt with more intensively. Just learning by doing. It therefore makes no sense to look at one without the other — and that taking into account other, especially psychological, factors.

Self-confidence and emotions

The fact is: We will never have finished learning. However, the feeling that they have not yet sufficiently informed themselves often prevents women in particular from taking financial action. Especially when it comes to investing, in addition to too little money, too little knowledge is the most common reason not to start. Instead of investing money, we then suffer from procrastination. In doing so, we probably already have a sufficient basic understanding or have acquired enough knowledge. However, a lack of self-confidence and self-underestimation thwart our plans. Study results also illustrate this uncertainty. A study showed that women are more likely than men to choose “I don't know” as an answer to financial questions, although they usually give the correct answer when the “I don't know” option is no longer available. A survey by Fidelity also showed that only 33% of women feel self-confident about their investment decisions. Various statistics show that women who invest do so more successfully than men. So sometimes we should just get started to prove to ourselves that we know enough, are good at something, or to see where we can still learn.

In addition, we must be aware that it is usually not only the supposedly missing (underestimated) knowledge that prevents us from getting started, but also our emotions. Finances are emotional. Financial decisions are shaped by our emotions and experiences. Our financial habits are already developing at the age of seven to nine. While childhood finances were not a topic of conversation at home or securities even frowned upon, this has an impact on our 7-nancial behavior in adulthood. We must therefore question ourselves and reflect on whether learned experiences and the associated emotions also cause our procrastination.

What we ultimately need

Of course, financial education is therefore important — particularly as early as a child — and should be promoted. However, we also need suitable, helpful tools that enable the application of knowledge and the visibility of role models who inspire us, motivate us, strengthen our self-confidence and break the taboo “you don't talk about money,” as well as more empathy in the financial sector and financial products. According to studies, many women ultimately want to be accompanied during the process, because this gives a feeling of security. Such support must be considered from knowledge to action.

And if we pick ourselves up now and don't fall into procrastination again after being informed for the first time, we should take the advice from financial expert Anne Connelly to heart in the podcast Female Finance: “Get your feet wet a bit.” — Not headlessly, of course, but with prior research and/or professional support.

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sources:

VOX, Bryan-Podvin, L. (2022): Money is emotional — but personal enance advice rarely accounts for that

Sparkassen Innovation Hub (2021): Female Finance — Women in the Financial World. Gender Gaps and Unrecognized Needs Bucher-Koenen, T. et al. (2021): Fearless Woman: Financial Literacy and Stock Market Participation

Female Invest (2023): Is Your Imposter Syndrome Costing You Money?

Fidelity (2021): Women and Investing Study

Female Invest (2023): The Gender Investing Gap is Real and the Statistics Are Here to Prove It

Berkley University, Barber, B.M. & Odean, T. (2001): Boys Will Be Boys. Gender, OverConedence, and Common Stock Investment Cambridge University, Whitebread, D. & Bingham, S. (2013): Habit Formation and Learning in Young Children

Female Finance podcast (2022) — episode 1 “About stocks, ETFs and why women are better fund managers”

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