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Women generally have a lower risk tolerance than men when it comes to money. It’s a concept that’s studied often and in-depth. In exploring the more emotional and psychological reasons why this difference occurs, we interviewed Dr. Nicole Garner Scott, a renowned financial expert and coach who has spoken for several Fortune 500 Companies, appeared on CNN, and was an awarded entrepreneur under the Obama Association.

Dr. Scott’s book “Make Space For Wealth” will be out this fall, and covers many topics that pertain to financial fear. “The purpose of the book is to create a mindset shift,” she noted. “and doing everything you can to adjust your life to capitalize on that money when you get it.” Having coached many clients on wealth management, Dr. Scott was familiar with the concept of financial fear, and she provided some very valuable insight into why it happens and how to fix it.


financial planning risks

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It’s passed down

“A lot of financial fear women deal with can be generational,” Dr. Scott explains. Many women, she says, may have grown up in households where their fathers handled all of the finances and their mothers weren’t invited into conversations about household finances – “It was always the man’s role to handle things.” That pressure to provide may vary based on one’s race, too. Research has found that Black mothers and fathers are particularly prone to measuring what sort of spouse or partner they are based on whether or not they can financially provide for their families.

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Financial empowerment is new to us

With regard to men carrying the burden of managing all of the finances for their entire households and women having no role in that process, Dr. Scott says, “It wasn’t really until we got to this generation that we saw how it negatively impacts men and women.” Now, women are experiencing odd growing pains. They know they have the power to manage finances in their homes but may not have those female role models who did the same. Even if they had one, and their mothers were financially progressive, they likely don’t have several generations of such role models. Their grandmothers, for example, likely didn’t deal with the household finances.

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Now, there’s healing to be done

“It affects men because one person can’t carry the weight of the financial decision making for a whole household. Our dads and grandads are filled with trauma of carrying that burden for all people,” Dr. Scott explains. On the reverse end of that, as women, it’s hard to shake this age-old notion that handling money is a man’s job. Everyone, men and women, has trauma from the way things used to be done. “Understand what’s been passed down to you culturally, and how that does not serve you,” instructs Dr. Scott.

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The change is good

This shift in the way household finances are managed is a good thing. Dr. Scott says with regard to every member of the family – women and children included – now participating in the family financial talks, “You need the dynamics and perspectives of multiple people making long term decisions… any time you can look at things from different angles, you’re able to make better decisions.”

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Your financial inner child

Did you know you had a financial inner child? Dr. Scott says that “Someone can be 40 years old in every area of their life, but when they go back to dealing with money, they go back to the way they dealt with it at age 12. That’s when they were first traumatized with money.”

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What did that trauma look like?

Dr. Scott elaborated on some of the financial trauma one might have experienced as a child. “Maybe that’s when you were evicted. Or that’s an age when friends could afford things you couldn’t. You started to associate money with lack.” Another example Dr. Scott offered was this: children who grew up in a very frugal household may still carry those habits of frugality with them as an adult, even when they don’t serve them – even when they perhaps hold them back.

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A bit on Dr. Scott’s childhood

Dr. Scott shared that shew grew up in a household of great frugality and that behavior followed her into adulthood and “Challenged my quality of life,” she says. One example of how this can be true for other adults is buying the cheapest car you can – a total lemon – that keeps breaking down on you, so you miss job interviews, you miss opportunities, and you spend more on fixing the car than you would have on buying a better one to begin with.

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Learn your triggers

Dr. Scott advises people learn to “Recognize those triggers. Especially for women, we operate from an emotional space, we have a lot of empathy. Figure out what you need to heal, so you can be prepared for those triggers.” Things that happen to someone at a young age can influence them for life, and that includes financial experiences.

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There are still obstacles after the healing

Even when women heal their inner financial child, there are still experiences and facts of life that can hinder their financial confidence, and their ability to see how valuable they are in their workspaces. Dr. Scott lists some of the reasons behind that. “On the macro level, it’s hard for women to see themselves valued at a high rate when their livelihood is being threatened for being a woman.” One example she gave is, “You’re afraid to celebrate your pregnancy, for fear that your job might find a way to let you go, so they don’t have to deal with maternity leave.”

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Then there’s the pay gap

Some of the realities threatening our financial confidence aren’t biological at all. Dr. Scott brings up scenarios such as, “You just got a new job, are proud and learn that your male counterpart is making twice as much as you, and you have the same if not better credentials. You might even be helping him do his job, and yet you’re bringing home less.” Even though these experiences can be disheartening, Dr. Scott urges, “Be confident in where you stand and what you bring to the table.” Dr. Scott noted that both the gender pay gap and the racial wealth gap have worsened during the current COVID-19 pandemic meaning Black women specifically may be getting hurt the worst financially right now.

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Practical concerns can get in our way

There are the finances of today (water bill, car lease, groceries) and there are the finances of the future (home down payment, retirement account), and the finances of today have such an urgent nature, that they can wind up taking up all of our time and attention. “It’s hard to think of the big picture when you’re trying to get through the here and now,” explains Dr. Scott.

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We need to make room for future finances

As Dr. Scott explains, when “You’re taking care of the home and children…you can lose sight of the long-term vision. But long-term vision is where the wealth lies. That’s where you can put yourself in a space to put a surefire plan in place to secure generational wealth. To have something left behind. That only happens when you think of the future. But so many women are entrenched in the moment and…” (here’s where we hit on female financial fear) “…that causes anxiety in women.”

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The here and now can be debilitating

When we’re worried that financial moves we make for the future could impact our finances of today, of course we feel frozen by that fear. In speaking of a couple in which the husband wants to invest and the wife worries about losing access to that money when it could be used for things like, paying down a mortgage or groceries, Dr. Scott said this: the man is thinking about the future, and the woman is worried about the now. Women worry about “being the glue for everyone else,” as Dr. Scott put it.

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It’s okay to mess up

Dr. Scott said one very impactful thing that could possibly change one’s financial behaviors: “Give yourself permission to make mistakes. To have freedom. To not have all the answers.” She’s right. We can’t hold every financial risk we take to the standard of perfection.

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No surprise here: you can’t do it all

Another important part of making that space for future planning is delegating. “Delegate, so you have time to make more money,” says Dr. Scott.By the time you’ve given all you have to everything else outside of yourself, you have no energy left inside of you to tap into your financial creativity, your financial gut.  [You could be] finding opportunities. Finding investments. [Ask yourself] ‘what skillsets could I be capitalizing on?’”

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