A new study finds a widening gender gap in financial literacy, with women lagging behind in key areas such as money management, investing, and financial planning.
In the first quarter of 2012, women were far less likely than men to have taken a risk tolerance assessment to determine their investment strategy (37 percent of women respondents vs. 57 percent of men), rebalance their accounts (25 percent vs. 49 percent) or conducted a fee analysis on their portfolio (10 percent vs. 28 percent).
In terms of money management, women are also less likely to have an emergency, or rainy day fund to cover unexpected expenses or pay the bills in case of job loss (43 percent vs. 63 percent). Less than half are regularly paying off their credit card balances in full (45 percent vs. 68 percent of men).
The gender gap in financial literacy is less pronounced in the areas of estate planning and retirement planning, the study found. Women are virtually on par with men in making sure their beneficiary designations on their insurance and retirement plans are up to date (80 percent of women vs. 81 percent of men). Women have a slight edge on men in participating in their company’s retirement plan (92 percent vs. 91 percent). A near equal percentage (26 percent vs. 27 percent) contribute to a traditional or Roth IRA.
While men are more likely than women to have a updated will or trust there is only a six percentage point difference between them.
Several studies have shown that women are less confident in their investment knowledge and are prone to do more research. This can be seen in the Finesse report’s finding that women have a slight edge over men (60 percent vs. 59 percent) when it comes to college planning and understanding financial aid options, such as grants, scholarships and student loans, that might be available. But only 16 percent of women said women said they know how much they need to save for college costs and whether they are on track to meet that need (16 percent vs. 29 percent of men)
These findings have worrisome implications for women, who on average have a greater life expectancy and must make their retirement savings last longer. This is especially challenging when one considers that women earn less than men over the course of their work lives.
Nearly half of women (46 percent) said that running out of money in retirement is their greatest financial fear, according to a Millionaire Corner investor survey conducted last month. Nineteen percent (vs. 16 percent of men) said that their biggest financial regret was not saving enough for their senior years.
Millionaire Corner also found a confidence gap between men and women when it comes to their financial knowledge, with women twice as likely as men to say they were not very knowledgeable about finances.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.