Gender Gap in Financial Literacy Is Growing
The gap between men and women in knowledge and awareness of personal finances is growing, according to a new survey by Financial Finesse. The survey found wider gaps between men and women regarding general knowledge about investments and confidence about portfolio allocations. Gaps also widened for measures of financial planning, including regularly paying off credit card bills and having an emergency fund.
Just 66% of women said they had general knowledge regarding stocks, bonds and mutual funds, versus 89% of men. Only 34% of women understood the tax implications of their investment strategies, a significant 22 percentage-point gap below that of men. Worse yet, only 12% of women said they knew they were on target to replace 80% of their income in retirement—10 percentage points below that of men.
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On a financial planning standpoint, fewer women than men had a handle on how much they are spending each month (62% versus 78%). Only 52% of women were comfortable with their level of non-mortgage debt, versus 71% of men.
The impact of the economy, which has adversely affected job security and led to volatile investment performance, cannot be dismissed from the survey’s findings. For example, just 79% of women are contributing the amount needed to maximize their employer’s 401(k) plan matching funds, versus 87% of men. Only 29% of women feel confident about their portfolio’s allocation, versus 45% of men.
The danger is that women, on average, tend to live longer then men and therefore will need their retirement savings to last longer. Financial Finesse estimates that 90% of women will be solely responsible for their finances at some point during their lives due to the death of a spouse or a divorce. This is why it is important for couples to discuss their financial plans and investment strategies to ensure that both husband and wife can properly manage the couple’s assets.
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