Women and Money
In more than one third of American marriages, the woman out earns her husband. And although that’s a long way off from an even 50%, it’s a definite improvement on what the numbers looked like in 1987, when less than a quarter of women were the primary breadwinners in their families.
However, women still tend to pass the buck on important money matters, such as investing and retirement. While that may have to do with the remnants of traditional gender roles in a household, it could also be an indication that financial literacy (or lack thereof) is the cause.
According to studies, women are falling far behind men in financial literacy. And even worse news, men apparently don’t know much about the topic either.
A study by the Global Financial Literacy Excellence Center documents strikingly similar gender differences in financial literacy across countries. When asked to answer questions that measure knowledge of basic financial concepts, women are less likely than men to answer correctly and more likely to indicate that they do not know the answer.
In addition, women give themselves lower scores on financial literacy self-assessments than men. Both young and old women show low levels of financial literacy. Moreover, women for whom financial knowledge is likely to be very important—for example widows or single women—also know little about concepts relevant for day-to-day financial decisions.
Even women in favorable economic conditions are less financially knowledgeable than men. The gender differences are present for very basic as well as more advanced measures of financial literacy and financial sophistication. This is important because financial literacy has been linked to economic behavior, including retirement planning and wealth accumulation.
Women live longer than men and are likely to spend time in widowhood. As a result, improving women’s financial literacy is key to helping them prepare for retirement and promoting their financial security.
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