Women and Financial Literacy: A Look At the Numbers

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

As we discussed in the first article in this series, the increasing complexity of today’s financial and investing world may make financial literacy more important now than ever before. Unfortunately, though, some recent studies indicate that there is a relatively low level of financial literacy among many Americans today, especially women.

Financial Finesse, which conducts research on financial trends, recently performed a study to determine how large the gender gap is when it comes to financial literacy. In the study, employees were asked to answer a series of questions grouped according to these seven key financial planning areas:

  1. Investing
  2. Money Management
  3. Tax Planning
  4. College Planning
  5. Insurance
  6. Retirement Planning
  7. Estate Planning

According to Financial Finesse, the average gender gap in the answers to these questions is now 15 percent, up from 12 percent a year ago. The widest gender gap is in investing and money management, while the smallest gender gap is in retirement and estate planning. There is no gender gap when it comes to participation levels in qualified retirement plans like IRAs and 401(k) plans.

Some of the questions where the widest gender gap was demonstrated include the following:

1. “I have general investment knowledge regarding stocks, bonds, and mutual funds.”

Men — 89%

Women — 66%

2. “I rebalance my accounts to keep my asset allocation plans on track.”

Men — 49%

Women — 25%

3. “I have an emergency fund to cover unexpected expenses or to pay bills for a few months if I lose my job.”

Men — 63%

Women — 43%

4. “I regularly pay off my credit card balances in full.”

Men — 68%

Women — 45%

5. “I understand the tax implications of my investment and retirement accounts.”

Men — 56%

Women — 34%

6. “I have an umbrella insurance policy to protect my assets from lawsuits.”

Men — 37%

Women — 17%

The researchers noted that the gender gap in questions 1, 3 and 4 has risen markedly over the past year—by six or seven percentage points. “The percentage of women that are reporting paying off their credit card debt in full appears to be on the decline,” wrote the researchers. “This, coupled with the steady decline in the percentage of women that report feeling comfortable with their level of non-mortgage debt, may be cause for concern and is something worth watching in the future.”

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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