David Lerner Associates: Women and Financial Literacy

In addition, some of these studies indicate that women in the U.S. fare worse than men when it comes to financial literacy. Financial Finesse, which conducts research on financial trends, recently reported an average gender gap of 15 percent in the answers to key financial wellness questions grouped into seven different financial planning topics (such as investing, money management and tax planning). This is up from a gender gap of 12 percent last year.

Women today not only constitute the majority of college graduates, but they are making increasing strides in the workforce, but unfortunately the data indicates that there is a significant gender gap in financial literacy, which is concerning when you consider that women may have more financial challenges to deal with than men do.

For example, women live an average of five years longer than men, according to the report, so they have to make their retirement savings last longer, on average. Women also face higher healthcare expenses than men over the course of their lives and lower average monthly Social Security payments due to less time in the workforce, states the report.

In addition, 90 percent of women will be solely responsible for their finances at some point in their lives due to divorce or the death of a spouse, states the report. However, women report much lower levels of financial knowledge and confidence than men. In particular, women’s confidence in their retirement preparedness has slipped, and women lag behind men in terms of how much they are saving for retirement, according to the report.

The authors of the Financial Finesse report voiced concern about a reversal in what was a positive trend with regard to women paying off their credit card debt. From 2009 through 2011, women made steady progress in paying off credit card debt in full, but in early 2012 this trend changed course. Now, the percentage of women that are reporting paying off their credit card debt in full appears to be on the decline.

Another study conducted by the FINRA Investor Education Foundation determined that, on average, women pay a half-point higher interest rate on credit cards than men do. Over a lifetime, this could add up to thousands of dollars more spent by women in interest charges than is spent by men.

And women with low levels of financial literacy are more vulnerable to credit card mismanagement than are men with comparable levels of financial literacy, according to the report. For example, these women are more likely to carry a balance on their cards, to make only the minimum payment on their cards each month, and to pay late fees. Also, they are less likely to comparison shop for credit cards.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. (DLA). This material does not constitute an offer or recommendation to buy or sell securities and should not be considering in connection with the purchase or sale of securities.