The science behind financial stress and the gender divide

It’s a fact—everyone gets stressed out sometimes. And regardless of our gender, almost all of us have one worry in common—our finances. Depending on your level of financial independence, worrying about money can be a real weight on your shoulders. So this International Women's Day, we wanted to dive into the science behind financial stress and why men and women handle that stress so differently. 

In January, as part of our Mind Over Money research with our neuroscientist Dr. Jack, we looked at the biggest financial pressures across the world and got scientifically proven tips on how to handle them. We learned that men and women have different responses to stress and are affected differently by money worries depending on their financial situation.

Here’s what we discovered:

Since the pandemic began, many women have taken on additional responsibilities such as caregiving, homeschooling, and much more. However, we also found that women around the world are edging ahead of men in their perceptions of their own financial independence, with 59% of women feeling financially independent compared to 58% of men. Of the surveyed countries, the only country where more men (58%) felt more financially independent than women (52%) was Germany.

Yet although women were found to feel more financially independent than men, they were still 40% more likely to experience stress than their male counterparts. Plus, women experience stress differently from men and, consequently, respond to it in different ways. 

Dr. Jack, our neuroscientist, explained the science behind how men and women handle stress differently in our Mind Over Money research report. Here’s what he had to say:

 “Men and women respond differently to elevated stress, especially when it comes to decision making. High-stress circumstances tend to increase the attractiveness of risky decisions in men. But for women, high stress actually results in a decreased appetite for risky decisions. Sometimes the risky decision is the right choice to make, but only under circumstances where the risks have been carefully considered and the rewards are big enough to warrant any drawbacks associated with failure.

Dr. Jack explains that the disparate ways that men react to stress appears to contradict the “framing effect” principle, which contextualizes how people view a decision and their subsequent reaction. For example, a given choice can either be framed as a reward or punishment—just think about the difference in approach to eating a yogurt that’s 90% fat-free vs. one with 10% fat.

“Fascinatingly, under stressful conditions, men favor risky decisions more than usual—regardless of whether the choice is framed in terms of the associated potential rewards or punishments. The female appetite for risky decisions, on the other hand, tends to decrease regardless of how the decision is framed. Such consistency is rare in the notoriously slippery world of stress science.”

This contrasting response to stress could be one of the factors influencing the gender wage gap. Global data is pretty clear that, on average, men get paid more than women. This disparity has many causes, of course, but one reason could be that men generally feel more comfortable than women taking the risk of asking their boss for a raise. Our research uncovered that in some markets, like Germany, getting a pay rise is almost twice as stressful for women (21%) as it is for men (12%).

Luckily, Dr. Jack was happy to share some of his key stress-busting tips:

1. The best thing to do to reduce stress is to do more research. Slow down, reflect, and ask yourself—What did I do last time? 
2. Always make big decisions when you’re fresh. Go for a walk and give your unconscious brain a chance to reflect and make the decision when you return. When your mind is calm, you are able to make clearer, more rational decisions, leading to less stress in the long term. 
3. Ask for help if you need it—from friends, colleagues, neighbors, or anyone in between. Asking for input works wonders for reducing stress and helping you make those difficult decisions.

Here at N26, we’ve seen growth in our female customer base outpacing growth in our male customer base for the second consecutive year, across all our 24 European markets. We’re on a mission to make banking simpler, more transparent and more flexible to help customers de-stress when it comes to money. With N26, banking fits more seamlessly into your busy, modern life, so you’re always on top of your finances and prepared for whatever life throws your way.