Financial Literacy Gender Gap Is Harmful to Women

Sonya Sellmeyer
Woman meeting with financial planner

This article is the first of a three-part series on closing the financial literacy gender gap.

I am grateful for the women who blazed the trails before me, so I may have the freedoms, as well as career and financial opportunities, that I have today.

In 1920, women’s voices roared and were finally heard with the ratification of the 19th Amendment, which gave women the right to vote in the U.S. Iowa’s Carrie Chapman Catt led the suffrage movement on the national level and was instrumental in this great achievement.

While the U.S. economy grew an amazing 42% during the roaring 1920s, only 20% of women were considered gainful workers who independently benefited from this prosperity, according to a Harvard University study. Women were not only kept out of the workforce, but out of financial decision making and wealth management for their families — often told that money was a man’s responsibility.

Today, 57% of women participate in the workforce compared to 69% of men.

Considering that it has taken nearly a century for women to integrate into the nation’s workforce and earn incomes separate from men, it’s not hard to understand why women’s financial education, and thus literacy, has also trailed behind men.

Women consistently scored lower than men on financial literacy concepts —leading women to be more likely to engage in high-cost methods of borrowing, using payday lenders, pawn shops and rent-to-own stores. For example, the OECD found that 32% of women with low financial literacy are likely to engage in negative credit card behaviors.

The Iowa Department of Insurance and Financial Services believes it is critically important for women to obtain a financial education and have access to literacy resources in order to make the appropriate financial decisions for herself and her family and adequately save for retirement.

According to findings from the Retirement Income Literacy Gender Differences Report, 80% of older women failed a retirement income literacy quiz. Furthermore, 59% of widows and divorcees said they wish they had been more involved in long-term financial decisions and 74% don’t consider themselves very knowledgeable about investing.

Many women affected by the financial literacy gender gap may be ashamed of their lack of a financial education or of their dire financial situations. As a result, these women are reluctant to seek help or educational resources.

As your state government agency, the Iowa Department of Insurance and Financial Services is here to help provide financial literacy to all Iowans through our Save4Later educational curriculum and the public outreach program created specifically for women, SmartHER Money.

I invite you to read the next two articles in this three-part series on closing the financial literacy gender gap and to learn more about the importance of financially empowering women and paving the way for future generations of girls.

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