Millennial men don't mind risky investments like Bitcoin, or boosting their money knowledge with the help of the financial media. But their female peers are wary of risk, leery of the unregulated world of cryptocurrencies and more apt to gain financial knowledge from family members and employers.
Those differing approaches to personal finance were highlighted in PNC Investments' 2018 Millennials & Investing Survey, obtained exclusively by USA TODAY.
The distinct mindsets about money, the survey says, likely date back to the millennials' childhoods. When they were kids growing up, the "financial upbringing" boys and girls received from mom and dad had slightly different focuses. Females received a more conservative message, one emphasizing "saving" rather than "investing."
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Nearly seven out of 10 (67%) female millennials, for example, said their parents encouraged them to "save" money, versus just 58% of males. Similarly, only 29% of females surveyed said their parents "showed (them) ways to grow wealth." By contrast, 37% of males said their financial education was focused on wealth-building, the survey found.
"For millennial women, early savings education and encouragement did not always go hand-in-hand with the idea of investing, particularly between the ages of 13 and 18," says Rich Ramassini, senior VP and director of strategy and sales performance for PNC Investments.
How men view money
The men surveyed demonstrated a more aggressive approach to risk taking than their female peers, with 14% saying they "embrace risk." That was double the percentage of women who said they welcomed risk.
The men in the survey expressed a greater willingness to bet on exotic investments like Bitcoin and other cryptocurrencies to boost returns in their retirement savings accounts, such as 401(k)s and IRAs. Their cash was more likely to be funneled into investments with greater return potential, such as stocks, mutual funds and exchange traded funds (ETFs).
Men also flashed more of a do-it-yourself mentality, with nearly a third (32%) saying they managed their own investments. A lot of their knowledge of personal finance was gleaned from financial media (57%) versus 28% of females.
The most common source of financial education for both sexes came from members of their immediate families. Both genders gleaned money advice in similar amounts from financial advisers as well as financial articles, blogs and newsletters, the study found.
How women view money
Women, in general, viewed market risk with more trepidation, and were likelier to build wealth by saving rather than investing. Only 1% said they owned Bitcoin, a signal they viewed the cryptocurrency the way Superman viewed Kryptonite as a danger.
In a sign of their higher risk aversion, 90% of female millennials said they held cash assets, like money market funds or certificates of deposit (CDs). While these savings vehicles guarantee you'll get your money back, the returns are slight. The average nationwide money market account yields just 0.18%, and a 1-year CD pays 2.21% in interest, according to Bankrate.com. Those modest returns compare with a 4% gain for the broad stock market this year, and a nearly 20% gain in 2017.
A more aggressive investment strategy could explain why millennial men between 21 and 35 have saved an average of $101,500 for retirement, or 34% more than the $66,700 set aside by their female peers,
Another reason why female millennials have smaller retirement account balances is that they are setting aside a smaller percentage of their income in 401(k)s and other accounts earmarked for their Golden Years.
Less than half of female respondents (46%) said they were socking away 6% or more of their salaries, which means more than half are not taking advantage of the full employer matching contribution. In general, employers match up to 6% of worker wages in 401(k) plans. In contrast, nearly six out of 10 millennial males (57%) saved 6% or more of their pay in these tax-sheltered retirement accounts, the survey found.
Relationship between risk and return
Young people taking too little risk, however, could be making a mistake. Investing in stocks over long periods is a great wealth-building tool, and millennials have time on their side. The more years the money is working in the market, the more investors can take advantage of gains building on earlier gains.
"For members of the younger generation, risk can be healthy," Ramassini explains. "People's appetite for risk is often not on par with how much risk they can actually handle."
Ramassini urges millennials to boost their financial knowledge to better determine if they are taking too little or too much risk.
Female millennials -- even though their parents starting talking with them about managing money at an earlier age than parents of male millennials (age 11.6 for females and 12.7 for males) -- were less likely than their male cohorts to express confidence in their money-management skills.
Only one-third (32%) of female millennials said they "feel in complete control" of their financial well-being, versus 43% of males. Similarly, only a quarter (26%) of women said they were "confident" that they are saving enough for the future, compared with 40% of males. And only one in five (19%) women said they have a "solid understanding of how to successfully invest" their money, versus 36% of males.
When it comes to saving for retirement, there's no better time than the present, Ramassini says.
"It's critical that both male and female millennials take actionable steps, such as participating in the markets and building a solid emergency fund -- to ensure that their future is not in jeopardy."