Mother’s Day always reminds me that many women have influenced me in my life – lessons provided, advice freely given, experience in how to behave in a complex social world. So, when I read about issues of gender inequality, I pay attention. A recent article published in FINRA’s Alert Investor laid out the problem of the financial literacy gap between men and women. It’s an important topic for me to share and so here are some highlights:
Financial Literacy Gender Gap
"Women consistently score lower than men on financial literacy measures, and this gender-based gap may negatively impact women's long-term financial well-being," said FINRA Foundation President Gerri Walsh. Financial literacy— knowing how to make informed financial decisions—has been linked to a number of important outcomes, including wealth accumulation, stock market participation and retirement planning.
To better understand the gender gap, the FINRA Foundation examined financial knowledge levels in America by gender and generation at three points in time (2009, 2012 and 2015) over a six-year period. Overall, the data suggest that over a six-year period the gender gap in financial literacy has persisted. For the three largest generations (i.e.,
- A narrowing gender gap. Millennial women exhibit the lowest levels of financial literacy, but the gender gap starts to narrow among younger generations.
- Increased self-assessed financial knowledge. Unlike financial literacy, which has remained at about the same level over the last six years, self-assessed financial knowledge—regardless of gender—increased significantly between 2009 and 2015.
- Rising confidence in financial knowledge among younger generations. Younger women express more confidence in their financial knowledge compared to prior generations, a factor that many believe contributes to the gender gap in the first place.
- Growing exposure to financial education. Across generations, women were less likely than men to report that they were offered financial education. Millennials reported the highest exposure to financial education.
"It is encouraging that the gap in financial literacy and self-assessed financial knowledge appears to be narrowing for millennials—a trend that bodes well for women in the future," said FINRA Foundation President Gerri Walsh. "While a number of factors might influence these changes, access to financial education could be making a difference as men and women who participated in financial education in high school, college or the workplace tend to have higher levels of financial literacy."
A Path Forward for Women
Understanding where we stand when it comes to our financial knowledge is an excellent first step to taking action. Here are four ways to keep the momentum going to secure long-term financial security for all.
1. Set financial goals. Prioritize your goals and set timelines for when you want them to be accomplished.
2. Set aside money in an emergency fund. An emergency fund, or "rainy day" fund, can help you stay out of debt when things don't go as planned.
3. Build your knowledge of key investing concepts. Familiarize yourself with crucial investing concepts, such as diversification, asset allocation and the basics of investment risk.
4. Work with an investment professional. These professionals can help guide you through the process of making investment decisions, assist with financial goal setting and keep you informed about how the economy and financial markets are affecting your investment portfolio.
Source: Complete article available, FINRA Alert Advisor, May 11, 2018
Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.