Women Lack Financial Confidence; Here’s Why We Need to Increase Financial Literacy

Women are the new economic powerhouse.We’re more empowered than ever, more women than men are graduating with degrees, more women are in full-time employment,  more working mothers are the primary or sole earner in their households, female purchasing power is bigger than the GDP of China and India and more women are becoming entrepreneurs and CEOs than ever before. 

Collectively speaking, women are earning more and have more disposable income to spend, save and invest.  Yet despite accomplishing so much, studies show a decline in financial confidence among women. For women to truly be empowered, we must close the financial literacy gap. 

Here’s why: 

• Women will control more wealth. As of 2020, women are estimated to hold $72 trillion in private wealth which represents 32% of the total private wealth according to Boston Consulting Group. And this will continue to rise, as women continue to participate in the labor force more than in previous generations, and inherit wealth from their parents or spouses. By the year 2030, it’s estimated that women will control about two-thirds of the nation’s wealth. We owe it to ourselves to learn to manage those assets properly.

• Women live longer. Men live about 76 years while women live to be a little over 81, on average, according to a CDC report. This highlights the importance of proper retirement and long-term healthcare planning. Because they are more likely to outlive a male partner and experience longer periods of ill-health in later life, the cost of care for women tends to be much higher. By the time a woman is 75, there’s a 70% chance she will need assisted care at some point during her life. Anticipating these costs is simply a requirement to plan intelligently for retirement.

• Women shoulder more debt. Women today have a higher likelihood than men of completing college and graduate school. Unfortunately, graduation doesn’t guarantee financial stability. Student loans follow many graduates well into careers, and women in particular face serious obstacles when it comes to debt repayment. Women hold nearly two-thirds of the nation’s $1.54 trillion in student loan debt.  As women dedicate more post-college earnings to loan repayments than men, they are drawing from paychecks that are often smaller than a man’s income. Paying loans from their limited resources leaves less money to save for other financial priorities, like buying a home or building retirement savings. 

• Women deserve equality. On average, a woman today still earns less than her male counterpart – 82 cents for every dollar a man earns. That means more than $956 billion are lost every year due to the wage gap. Women tend to spend an average of 12 years less in the workforce, so due to these two factors they generally have lower lifetime earnings. It’s no wonder women are three times as likely as men to say they can’t afford to save for retirement. However, this is why understanding how to manage personal finances is even more important for women to make informed economic decisions and plan for their futures properly.

• Women are trailblazers. Millennial women are using their assets to contribute to causes they believe in, and take significant stakes in political and social movements as well as financially backing charitable causes. As women grow their wealth, there has been an increase in women-led groups specifically investing in female entrepreneurs. This will fuel economic growth by increasing broader consumer awareness of and support for women and minority owned businesses.

Investing in increasing financial literacy among women is imperative to achieving economic and social equality. Not only does it allow us to make smart financial decisions as leaders, professionals, and parents, but it will also help us to recover more rapidly from economic devastation like we are currently experiencing from COVID-19.  With higher financial literacy and economic self-sufficiency, there is no limit to what women can accomplish.

Charlotte DeMocker is co-founder and Chief Operating Officer at Penny, an innovative digital media startup that seeks to help all people master their money. She is a passionate creative, traveler, and youth mentor, and holds a degree in finance from Arizona State University. Follow her on Instagram @charlottedemocker.