Financial Literacy Gender Gap

According to the Society for Human Resource Management, a report by workplace financial education provider Financial Finesse, 2012 Gender Gap in Financial Literacy Research, shows women still lagging in in key areas of financial planning. The report identified that the gap between the genders is widening in nearly every area of financial planning.

The data was compiled by tracking the use of Financial Finesse’s online financial wellness assessment and learning center by employees located across the U.S. in similar proportion to the demographics of the national population.

2 Areas of Concern

According to the findings, the gender gap is most pervasive in two areas that are critical to achieving financial security.

Basic money management:

• 43% of women reported having an emergency fund to cover unexpected expenses, vs. 63% of men.

• 52% percent of women said they were comfortable with the amount of nonmortgage debt they had, vs. 71% of men.

Investing knowledge and confidence:

• 37% of women said they have taken a risk tolerance assessment and were aware of their conservative, moderate or aggressive investment strategy, vs. 57% of men.

• 25% of women reported rebalancing their investment accounts to keep their asset allocation plans on track, vs. 49%  of men.

Area of Parity: Planning

However, in two areas that tend to be proactive in nature,  women showed virtual equality with men – participation in:

  • Retirement planning
  • Estate planning.

Area of Advantage: Long-Term Planning

Women “tended to do better with long-term planning, which is about securing their family’s future. Short-term, more transactional quantitative decisions such as budgeting or investing, however, appear to be more appealing to men who enjoy the “game” of it.

Women Face Greater Challenges

The findings highlight certain challenges that women face that are not being adequately addressed:

  • Women should be the ones putting more focus on improving their finances because they face more challenges than men in financial planning.
  • Women Have Longer Lives: Women live approximately five years longer than men on average, and 9 out of 10 women will be solely responsible for their finances at some point in their adult lives because of divorce or the death of a spouse, according to the National Center for Women and Retirement Research (NCWRR).
  • Women generally make less throughout their lifetimes than men, making it difficult to become financially secure.
  • Women have lower average Social Security payments and higher health care costs, putting them at a disadvantage financially.

Women Are Open to Improvement

The good news is that women are seeking financial education and information at very high rates:

  • Women typically seek financial education about 2 to 1 compared to men.

As employers continue to deliver financial education programs that effectively reach women, we should start to see this gap narrowing. However, the financial services industry needs to focus on this issue more to help women see the importance of closing the gap to creating financial security for themselves and their families.

Related Articles:

Challenging Retirement Realities for WomenSHRM Online Benefits Discipline, May 2012

Encourage Employees to Defer Adequate Pay to Their 401(k)SHRM OnlineBenefits Discipline, May 2012

Women and Men Differ on Retirement Plan Investments, SHRM OnlineBenefits Discipline, February 2011