It’s a Rich Mans World
How we relate to our money has changed considerably in the past century, but it would be fair to say that it’s women (as a broad category) that have embarked on the most dramatic fiscal journey in Australia. Women have been able to take out a loan without a male guarantor since 1971 in NSW, while equal pay for men and women was granted in 1972. Realistically, we haven’t had the required rights for conversations about finance to be accessible until recently and that’s reflected in our financial literacy.
According to ASIC, 41% of women find money decisions overwhelming and stressful and 85% of women under 35 don’t understand fundamental investment concepts. Those numbers tell us that all too often, women don’t feel that they have the ability to manage their finances or the confidence to talk about them.
That’s incredibly important in a world where low financial literacy is associated with poor financial well-being. In a world where women are being told day after day that they can have it all, it’s overwhelming to feel so behind when it comes to being financially attuned. A lot of the content out there ignores the reality of money: it is not a fair playing field.
Why do women have a lower level of financial literacy?
In 2019, it can be hard to see why women still aren’t included in the conversation. While it’s a multi-layered issue, it’s clear to most of us that it is rooted in the same gender inequalities that Western society has perpetuated for centuries. Research in Germany regarding the financial literacy gender gap showed that in Thailand women were at least as literate, if not more so, than men. Culturally, women often have the financial responsibility in the household. In comparison, women in Germany and the US were still scoring lower even if they were the head of their household or had completed a higher education.
Another layer to financial literacy puzzle is that women are still earning a lot less than men. We’re still fighting a gender pay gap of 14.1% in Australia, not to mention the infamous ‘pink tax’, and we’re more likely to work part time or in a lower paid profession; female dominated industries tend to be lower paid, known as industrial segregation. Perhaps unsurprisingly, the largest pay gap occurs in the financial and insurance sector, where it sits at a staggering 26.9%.
How do we get better?
Closing these gaps is, unfortunately, no easy task; it’s fighting years of prejudice, assumptions, conditioning and education. By the time women are earning money, they’ve already internalised judgement that they are not as financially capable as men, making it no surprise when they are less confident in money matters.
Report after report indicates that low levels of financial literacy result in less financial “success”, so the recipe for better monetary knowledge seems fairly simple in practice: increased and better education. Financial literacy is low for all Australians, including men, which suggests that everyone could do with an increased level of financial education from a younger age. Financial wellness programs are an additional avenue of education that have a strong case made for them and could be a solution for those that are struggling with their finances having already completed their education.
The best thing we can do to improve female financial literacy in the short term is talk about it. We need to become comfortable having conversations about money, awkward or not, to build up our confidence in an area the majority of us have been unfamiliar with up until now. After all, it’s our own financial futures we are securing; what could be worth more when investing our time and interest?
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