The White House and Women’s Financial Literacy

This is the fourth in a series of articles discussing the importance of financial literacy for women.

With several recent studies suggesting that there may be a significant “gender gap” between men and women when it comes to financial literacy, the White House is now taking an active role in helping improve financial literacy among women in the U.S.

The White House has established a Council on Women and Girls that is focused on increasing both economic opportunity and security for women. “President Obama believes that for America’s women, economic security is a key component of economic opportunity,” comments the Council’s Chairperson, Valerie Jarrett, on the White House website.

Vulnerability to Financial Insecurity

The Council has published a report titled Women in America, which found that women are particularly vulnerable to financial insecurity. “Although working women account for a larger share of family earnings, pay disparities between men and women persist,” comments Jarrett on the White House website. “In fact, studies show that even after accounting for factors such as education or time spent away from the labor force, women still earn less than men.”

According to the U.S. Census Bureau, women in the U.S. earn an average of 77 percent of men’s salaries, which results in an annual salary difference of more than $11,000. Jarrett notes that these disparities add up over time. “As a result, women often receive smaller Social Security payments decades later, and have less financial resources to build retirement savings in 401(k)s or IRAs.”

In addition, many women need to save more money for retirement than men, since women live an average of five years longer than men, according to the U.S. Census Bureau. “The average woman has less money, and therefore needs more savings than her male counterpart,” notes Jarrett. “Women also control the majority of household consumer spending. This means that for today’s women and girls, financial literacy is essential.”

She adds that according to recent surveys, two out of every three women say that they feel they have little knowledge of financial products and services. “These women are less able to plan for retirement, less able to save for their children’s educations, and are more likely to fall victim to deceptive, abusive or predatory financial practices.”

Dodd-Frank and the CFPB

According to Jarrett, these are among the factors that prompted passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In particular, this Act created the Consumer Financial Protection Bureau (CFPB), which Jarrett says has made promoting financial literacy and accessibility one of its top priorities.

“We’ve all had the experience of looking at a loan or credit card agreement and becoming overwhelmed by the amount of complex legal language,” Jarrett notes. “The CFPB will work with financial services companies to make sure that in the future, these agreements are written simply enough that every consumer can understand them.”

In addition, the President’s Advisory Council on Financial Capability was created by Executive Order in 2010. According to Jarrett, this Council is tasked with advising the President and the Treasury Secretary on methods to strengthen and enhance coordination between existing public and private-sector financial education programs and on methods to identify effective financial capability approaches.

“The President believes that financial empowerment is one of the building blocks of a fair, transparent and competitive marketplace,” Jarrett noted on the White House website.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. (DLA). This material does not constitute an offer or recommendation to buy or sell securities and should not be considering in connection with the purchase or sale of securities.

 

 

 

 

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