Does It Cost More Money to Be a Woman?
On average, women pay a half-point higher interest rate on credit cards than men do, according to the FINRA study. While this might not sound like much, over a lifetime, it could result in thousands of more dollars spent by women in interest charges than is spent by men.
Credit Card Mismanagement
In addition, women with low levels of financial literacy are more vulnerable to credit card mismanagement than are men with comparable levels of financial literacy. For example, these women are more likely to carry a balance on their cards, to make only the minimum payment each month, and to pay late fees.
When it comes to compensation, women in the U.S. earn an average of 77 percent of men’s salaries, reports the Census Bureau. This results in an annual salary difference of more than $11,000. The National Partnership for Women and Families is urging Congress to pass the Paycheck Fairness Act to help close the gender gap when it comes to compensation differences between men and women.
Interestingly, when men and women with high levels of financial literacy are examined, the gender differences with regard to credit card management disappear. Therefore, education could be more of a factor in the difference between credit card management practices between men and women than policy. In fact, FINRA states that improving financial literacy may improve women’s credit card behavior by 60 percent more than men’s credit card behavior.
Improve Financial Literacy
Given the fact that women across all age groups are more likely to become widows than men are to become widowers, it may be especially important for women to improve their financial literacy. Here are three areas where some experts recommend that women concentrate their financial literacy efforts:
1. Know your spending patterns. A basic budget will show you what your income is, what your expenses are, and where the money you spend is actually going. It may also help you prioritize your spending, including contributing to a retirement savings plan like a 401(k) or Individual Retirement Account (IRA).
2. Keep your financial paperwork organized. Overstuffed file folders and shoeboxes filled with receipts may not be an adequate recordkeeping system for many women today. Consider setting aside a day (or a weekend or longer, if necessary) to work on getting your finances in order.
3. Invest wisely. No single investment strategy is right for every woman, which makes it important to understand the basics of investing so you can formulate the right strategies for you. You may want to consider working with an investment counselor, who can make recommendations based on your specific goals, time frame and risk tolerance.
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