Gender Gap Persists in Financial Literacy

A recent study by Financial Finesse found that women still fall far behind men in terms of financial knowledge and confidence, and are in danger of not meeting their long-term income needs. 

Financial Finesse has released its second special report for 2011, tracking the gender gap in employees’ financial literacy. Though the gender gap has narrowed since 2010, women still lag behind men in their knowledge and confidence in virtually all areas of finance.  

Among the reports key findings were:

  • 25% of women reported feeling confident with how their investments were allocated, compared with 42% of men;
  • 63% of women said they had a handle on their cash flow, versus 80% of men;
  • Only 12% of women and 19% of men are confident they will be able to replace 80% of their income in retirement;
  • 92% of women and 91% of men are participating in their employers’ 401(k) or retirement savings plans, but women may be investing too conservatively to meet their income needs in retirement.

The report did find, however, some signs that women are taking this message to heart and making an effort to educate themselves about their finances. According to the release, in Q1 2011, the gender gap began to narrow across all demographic groups, with women under 30 showing the most improvement. Women are twice as likely as men to use workplace financial education services and are more likely to make changes as a result of the education they receive. The release claimed that studies also have shown that when they are educated about finances, women tend to outperform men in their investing because they tend to trade less, incurring lower fees and taxes.

The full report is available here.