Tue, Jun 30, 2015
Filene Research Institute reports that among survey respondents taking a 5-question financial literacy test, only 25% of women are able to correctly answer the three simplest questions—about interest, inflation, and risk diversification—compared to 47% of men.
The tide is coming in. As women work, earn, save, spend, and invest, they are becoming a more powerful driver of the US economy. Fully 58% of women in America were working at the end of 2012, up from 44% in 1972 (US Department of Labor 2015). And one estimate puts private wealth in the United States at $22 trillion by 2020, with half of that in the hands of women (Silverstein and Sayre 2009). More work and more assets are coming at a time when men and women alike are required to assume greater responsibility for their own financial futures.
While more women are participating in the economy than ever before, there are still many who are unemployed or who choose to stay at home. The responsibility of raising children often falls to women, by choice or necessity, which takes them out of the workplace at the height of their earning potential. Women also live longer than men, making them more likely to manage finances alone after the death of a spouse. Financial service providers must respond to the specific challenges women face, so that women—employed, unemployed, and homemakers alike—can gain and then maintain economic stability.
In this final report of our financial capability series, we explore the unique financial challenges of women. Pulling together information on assets, liabilities, knowledge, and advice seeking, the report constructs a telling profile of American women. Among the worrisome trends the authors find that many women are not planning for retirement, often engage in expensive credit card behaviors, feel burdened by debt, and are financially fragile, particularly the young and unemployed. All of these issues are exacerbated by low financial literacy and a reluctance to seek advice. Too often, women don’t know what they don’t know.
This report also points out areas in which credit unions can better help women save, invest, and manage debt throughout their lives. To achieve this, credit unions should cater to the specific needs of women. No one approach or product will cure all ills, but specific services should be targeted to different groups of women, all of which exhibit characteristics that differ from those of the population as a whole. Here are some highlights:
- In light of women’s low levels of financial literacy and the unique challenges they face, channels and counseling should be directed at women.
- Women differ broadly over demographic categories, like age and marital status. For this reason, customized advice through counselors or remote channels should be provided.
Women who stay at home form a distinct group whose characteristics and traits differ from those of the employed or the unemployed. Many report high levels of concern and dissatisfaction regarding their financial security and debt. New approaches are needed to address their financial positions.