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It seems financial stress during the holidays has grown to be an annual tradition, especially for women.

Despite being just as likely to budget their finances as men, financial distress during the holidays is especially pronounced for women who report lower financial well-being throughout the year. According to CNBC, 38 percent of women are anxious about holiday costs. While fintech consistently positions itself as a connection capable of narrowing the gap in financial inclusion so prevalent in the United States, adoption rates for women still trail, telling financial institutions they still have major ground to cover to better serve half of America’s population. 

Trouble started earlier in the year when the U.S. reopened in the summer and Americans started spending more on travel, dining, and social activities. The summer spending took a toll on stress levels while the much larger issue was the lingering effects of the COVID pandemic. Ellevest CEO Sallie Krawcheck left little room for interpretation when explaining how the pandemic has only exacerbated the gender gap for investing, savings, and debt: “The pandemic has disproportionately impacted women.” 

With holiday prices expected to rise as much as 20 percent, women are at risk for adding debt without a financially responsible plan. As a result, more women than men are expected to to lower their holiday gift spending this year by a margin of 14 percentage points. Adding to the frustration, 56 percent of women are more likely to feel compelled to purchase more gifts for others during the holidays, versus 48 percent of men. 

Lower financial well-being for women may be attributed to multiple cultural and social circumstances as well, particularly the relatively short period women have had control over their individual finances. It was only going into the 1960s that women in the U.S. could open their own financial accounts. With only two to three generations of participation in the financial system, women may be less reasonably confident or established in the still-male-dominated financial services ecosystem. With lower financial literacy rates and less confidence managing finances — specifically when considering investing — credit unions have plenty of opportunity to advance financial literacy and education for women in their communities. 

Fintech yet to boldly go to that final frontier: women

Following the last two decades, the wide accessibility of finance by way of digital transformation was designed for near-unlimited platforms supporting budgeting, saving, investing, and responsible small dollar lending like QCash. Such digital, and hence mobile, platforms are dedicated to lifting the underserved out of financial instability and onto the path to financial health and inclusion.

The catch is that it isn’t about a lack of planning or ignorance in budgeting that causes uncertainty or anxiety for women when it comes to holiday finance. Ironically, women are just as likely as men to set annual budgets, including the holidays! From U.S. adults who budget, men are shown to be more likely to use technology to manage their finances than women — technology in the form of budgeting tools, mobile apps, and computer spreadsheets. Translate those characteristics to the boom in fintech, and men have become accepting of managing their finances and improving their overall financial well-being. 

In fact, research from BIS shows women are roughly half as likely to use financial management apps. Apps from established financial institutions like big banks, however, close the gap, somewhat. 

That said, the gender gap in fintech inclusion is widely recognized and accepted, while comprehensively researched. The root cause of women’s adoption of fintech relative to men, however, remains frustratingly elusive. 

Cost of services may play a factor for some women, but their reluctance to share personal or financial data may understandably play a factor, too. Despite research suggesting they trust financial services institutions just as much as men, women report lower willingness to share their financial data in return for more personalized service. 

Before financial services companies finalize their 2022 strategies, heads in both financial services and fintech should recognize the opportunities women represent and lay out measures intended to both target and draw them into their credit union community through fintech.

Photo: Tim Goedhart | Unsplash

Taking those steps out of financial distress and into financial health

According to Experian’s most recent holiday spending survey in 2020, 60 percent of consumers were stressed about their finances during the holidays, while 50 percent said those worries made the season more difficult to enjoy. COVID played a factor as well, unsurprisingly, as 52 percent said the pandemic has caused financial barriers to their usual process of shopping the way they had planned. 

To limit much of the stress your members may be dealing with leading up to the holiday shopping season, Experian offers some suggestions on how to advise your members in protecting their financial health and paving their road to financial health going into the New Year. 

Formulate a budget and plan

Spending during the holidays can catch up to any one of us in quick and very unexpected ways, which is a perfect reason on its own to budget for and protect your financial health. According to Experian’s own research, the average American intended on spending $775 on holiday gifts in 2020, and there’s no reason that figure won’t stay the same or even grow during the 2021 holiday season. 

Start by outlining how much your members can realistically afford to spend while trying to factor in those expenses that can get lost or overlooked in the process. Research found four out of five consumers run into expenses they hadn’t planned for including purchasing more gifts than expected, wrapping paper and supplies, and ever-increasing mailing costs. 

Once they have their budget solidified, knowing who they’re shopping for and where will help them hold to their plan. The Experian survey showed 62 percent of people last year said they were largely relying on shopping online. While in-person shopping has rebounded in 2021, due to supply chain issues your members will want to maintain discipline in gauging the cost of those gifts. Remember, prices on everything from toilet paper to technology will be affected, so it’s up to their discretion how much gets spent on what. 

If members are going to follow up last year’s online shopping extravaganza with another one, they must be sure to track their online sales and promotions so they can potentially save money. Additionally, keeping an eye on shipping costs (remember those unplanned-for holiday expenses?) will keep their budgets on track. 

Credit is a financial tool, not an accessory

In 2020, over 50 percent of shoppers claimed they were going to use credit cards instead of cash when holiday shopping. As with any other time of year, employing credit wisely during the holidays is important. The key to a credit card is using it strategically — obtaining low interest, cash back, or reward points — to enhance the shopping experience and stretch dollars. 

Communicate to your members that credit is a financial tool while debt is not. Debt you cannot afford to repay tends to dampen the average holiday spirit. If your members don’t have a regularly scheduled plan to pay off their credit card every month, maybe using credit isn’t a good idea. 

Protecting one’s identity isn’t just for superheroes

There is no riskier time of year than the holiday season when it comes to identity theft and credit fraud. Consumers who have been victims of identity theft during past holiday shopping seasons doubled from 12 percent to 24 percent in 2019. Figure online traffic into the scenario, and the holidays are flush with opportunities for cyber-criminality. And that was before the effects of COVID drew even more shoppers online in 2020. 

Here are three ways to protect your information from identity theft when shopping online: 

  • Avoid using public wi-fi networks
  • Create strong passwords (letters, numbers, characters)
  • Only shop on websites with which you’re familiar

Credit cards, rather than debit cards or cash, offer better protection for both online and in-person purchases. If a member’s info gets swiped by an identity thief, their money is not gone from their checking account. The member can call you or the proper issuer.

The process to financial inclusion and health is an everyday, year-long enterprise. While fintech works to adopt more women towards recognizing its advantages in this increasingly efficient financial ecosystem, there are still precautions consumers can employ to steady the ship during the holidays.