The generation game: financial wins for women at every age

New research into women’s attitudes towards money show different generations can learn from each other and no-one has the monopoly on being good with money.

The BNZ Financial Futures research also found grandmothers and granddaughters have more in common than they might think.

Women aged under 25 and over 65 are less likely than other women to believe that owning a home is a sign of financial success, with 48% considering it relevant, compared with 57% of other generations.

The youngest and oldest women also shared some behaviours around money, being more likely than other age groups to save for expensive non-essential items. This could be things like the latest mobile phone or tablet. But if they did borrow, they were less likely to pay off the loans with highest interest rates first.

Donna Nicolof, BNZ’s Head of Wealth and Private Bank, says: “The differences between younger and older women came out when we asked them more about their attitudes towards debt.

“Nearly a third of women under the age of 45 are accepting of a reasonable level of debt compared with only one in five of women over 45.

“That’s understandable, as people under the age of 45 have grown up with credit easily available – taking out student loans or using credit cards have become the norm. Whereas older people were brought up to live within their means.

“It was good to see the realisation among half of those women under 25, and nearly as many under 35s, who said they could save more if they cut down on some non-essential spending.

“That’s a question of prioritising spending such as eating out only for special occasions and entertaining at home. It’s worth putting even a small amount aside each week throughout your life to take advantage of the benefits of compounding interest over the long term,” Ms Nicolof says. 

More than half of women aged 25-64 regularly pay back more than the minimum on their debt, the survey showed.

“This is outstanding as saving and reducing debt are crucial strategies for financial wellbeing. People often ask me what to do if they receive a lump sum, from an inheritance for example, and I generally always say reduce your debt,” Ms Nicolof says.

While women in their mid-thirties to mid-fifties are the group most likely to struggle to save or pay their credit card in full each month, their attitude to saving and investing could help them.

Four out of ten women in their mid-thirties to mid-fifties thought it was good to take calculated risks with their money to grow the savings they do have, compared with three in ten of all other ages.

“A positive attitude towards risk helps in the long run because calculated risk can bring higher returns,” says Ms Nicolof. “We see this with KiwiSaver for example where people in growth funds are likely to have a higher return over the long term than those who invest in conservative funds.”

A study by US fund manager Ellevest, which specialises in investments for women, found female investors tend to benefit from being risk-aware. They often want to understand a risk thoroughly before they take it on, resulting in them accepting ‘smart’ risks which lead to long-term success.

The number of New Zealand women who own shares is relatively low, at 25% according to the Financial Futures research. But as they get older women are more likely to own a diverse range of investments, with the number rising from 18% of under 25s to 29% of over 55s.

“Diversification is the key to growing your wealth so it’s an important factor to pay attention to as you plan your financial future,” Ms Nicolof says.

The Financial Futures research also showed that women understand their finances better as they get older, with 95% of the over 65s having a deep understanding of their financial situation, compared with only 56% of the under 25s.

“There’s a good level of understanding for all women over 25. But one area where everyone under 65 could focus on more is working out how much money they will need for retirement – 75% don’t know. If you set yourself a goal, it’s much easier to work out what you need to do to get there,” says Ms Nicolof.

There are tools that can help with this, including the BNZ KiwiSaver calculator, which can show the impact your fund choice or contribution rate could have on your lifestyle in retirement.