Women lagging in financial knowledge and confidence
By Emily Hutto
Women are the primary financial decision-makers in most households, and yet they are also the least knowledgeable and least confident when it comes to their financial futures.
A report from Financial Finesse titled "Gender Gap in Financial Literacy" suggests that women are not as knowledgeable as men about their financial futures.
Financial Finesse researchers found that the number of men and women who have 401(k) plans are generally comparable. And while men are generally more prepared for retirement than women, there wasn't a huge gap in their preparedness. The gender gap was largest when it came to knowledge and confidence about investing and budgeting.
The report reveals that men are more likely to pay off their credit card balances in full and pay their bills on time. Men were also more likely to have emergency funds, and reported to be more comfortable with their mortgage rates. Women, the report says, are not as knowledgeable or confident as men about stocks, bonds, mutual funds and allocation of their investments.
Another report from Catalyst.org complicates this issue, suggesting that women have become the principal financial decision-makers of most households. So, women are making the majority of financial decisions, and yet they are the least confident about doing so.
According to a study of 1,000 women done by Northwestern Mutual, 63 percent of women feel their financial planning could use some improvement. Only 48 percent of them feel financially prepared for age 75, 37 percent prepared for age 85 and only 30 percent prepared for age 95.
Womens' lack of confidence in financial planning might actually be a good thing, though. They are more likely to approach their finances with caution and opt for low-risk investments. Rebekah Barsch, the vice president of Northwestern Mutual, told PR Newswire Association, "'There are some good signs here – particularly in women's recognition that their financial planning needs more attention.'"
The conclusion of the Financial Finesse report says that while the economic gender gap is improving, there are two major dangers that could still negatively impact womens' financial wellness: not saving enough and investing too conservatively.
It might be time for women to take a more proactive approach toward understanding their finances. It might also be time for their financial advisors to take a more proactive approach toward educating clients. This two-way street can boost womens' confidence about their investments and ensure their financial stability into the future.