Empowering Women through Financial Literacy: Realities and Resources

Two television commercials that ran several years ago tell two different—but related—stories about women and money. In one, a financial firm selling investment products showed an elderly couple discussing retirement planning and investment options. "I don't understand any of it!" the woman exclaimed in the background with a laugh. In the other, a health insurance firm featured a radiant centenarian who declared, "I never thought I'd live to be a hundred!" The first commercial illustrates an old stereotype about women's bafflement when it comes to managing finances, with perhaps a kernel of truth: surveys often show that women do not feel as confident as men in their ability to handle money. The second commercial is based more on numbers than on any stereotype. Statistics tell us that women live longer than men, which means that women's retirement savings should stretch further than men's—and which perhaps makes understanding personal finance a little more important for women than it is for men.

According to a Women & Money Magazine survey, 50 percent of women find it difficult to talk with others about personal finances. The survey also reveals that just one-third of all women have a detailed financial plan. For women aged 25–34, this number drops to 10 percent. An even more sobering statistic from the survey is that for women of all ages who earn more than $30,000 a year, 12 percent have not yet even begun saving for retirement. Transamerica's annual retirement survey found that, among women who are saving, one in three feel they are not saving enough. This survey also found that 43 percent of women plan to work past 70 or not retire at all—a percentage that is slightly higher than the number of men who responded similarly.

Annamaria Lusardi, academic director of the Global Financial Literacy Excellence Center at George Washington University School of Business, coauthored a study of financial literacy skills across eight countries. She found low levels of understanding for both genders. Regarding women, she found that although they had more difficulty than men with technical terms and financial jargon, they also showed, like the woman in the commercial, more willingness to admit what they don't know.

Effects of the gender wage gap after retirement
People pay a lot of attention to the gender wage gap, but what they often overlook is how that gap affects women after they leave the labor force. Lower lifetime earnings because of this gap necessarily create smaller pensions and social security benefits. Retired women receive, on average, half the pension benefits that men earn. Many factors contribute to this situation. For example, women spend an average of 27 years in the labor force, compared to 40 years for men. They are also more likely than men to have part-time jobs, which often do not provide benefits. Other factors, such as divorce and having to care for children or elderly parents, can also contribute to lower lifetime earnings.

Other issues complicating the retirement picture for women include the higher incidence of single or widowed older women, who may have to rely on just one income, and their longer life expectancy, like the centenarian in the second commercial. A longer life can mean more health issues—and greater health care expenses, which women should factor into their retirement budgets.

Resources for financial skill-building
The Federal Reserve and other agencies have numerous online resources for women and men to gain the skills they need to secure a solid financial future. At the Federal Reserve Board of Governors' website, for example, you can find links to resources such as "4 Steps to Your Financial Freedom," "Get Financially Fit," and numerous guides with information on credit cards, banking, and mortgages. The Federal Reserve Bank of Dallas offers Building Wealth: A Beginner's Guide to Securing Your Financial Future, an animated series that is available in print, as an online interactive, and in a mobile app. The series, which has content of use to teachers, students, consumers, and community leaders, contains chapters on setting financial goals, budgeting, saving, investing, managing credit and debt, and understanding and securing insurance for asset protection.

At the Federal Reserve's economic education website, more than 175 personal finance resources of all types can be discovered. The Personal Finance 101–Chat series from the Federal Reserve Bank of St. Louis includes simulated online chats covering such topics as car loans (how to get them), facts about debit cards, and the ins and outs of buy-here-pay-here financing. A video series—Personal Finance 101—Conversations—addresses college choice, financial aid, and the Free Application for Federal Student Aid, or FAFSA, and so does St. Louis's College Education 101 infographic, which packs a lot of college finance information into a single visual aid. One of the videos in St. Louis's No Frills Money Skills video series helps viewers brush up on their investment knowledge by watching James Bond battle Miss Information. Other videos in the series delve into the topics of stocks, 401ks, and compound interest. The St. Louis Fed's Econ Lowdown page offers free online courses for both the classroom and consumers. These courses address a variety of personal finance topics, including budgeting, buying a car, credit, and saving.

In addition, the Federal Reserve Bank of Richmond's Major Financial Decisions web page provides information to help consumers navigate decisions regarding college, buying a home, and planning for retirement.

Hurricane Katrina is the backdrop for the Federal Reserve Bank of Atlanta's video-based series Katrina's Classroom: Lessons from a Hurricane. This series teaches the basics of financial literacy and the virtues of being financially prepared. Newly updated in 2013 with fresh lesson plans, activities, and PowerPoint and whiteboard content, you will find not only material that is relevant for your classrooms but also compelling video stories of young people who survived the storm and whose lessons can serve to educate all of us.

Outside of the Federal Reserve resources, MyMoney.gov has financial tips as well as calculators, worksheets, financial literacy quizzes, and even a primer on preparing financially for such major life events as college, marriage, retirement, and home ownership. It also highlights resources that are useful for educators to use in the classroom.

Another source of good financial literacy information and advice is your local extension service. Most often known for their agricultural advice, extension services also provide valuable resources on money matters. For example, on the University of Florida's Institute of Food and Agricultural Science Extension Service website, you can find publications with tips on basic money, credit, and debt management as well as with information on insurance, retirement planning, and saving and investing. The site also features Women and Money: Unique Issues, a series of publications covering such topics as divorce and remarriage, choosing a financial professional, and money and the family. The site's Electronic Data Information Source provides an abundance of online articles and tip-filled publications on a wide variety of personal finance topics, including Coping with a Money Crunch, Building a Spending Plan, and Money and Marriage, all series that are available on the website. Also among the publications on the website of the University of Florida's extension service is an article featuring a classroom—adaptable discussion and a checklist for teens to use when they're considering a cell phone purchase.

Financial education is important for all, and we need to make sure that all have access to it. In 2012, the Group of 20—a forum attended by finance ministers and central bank governors from the world's 20 most highly developed economies—released a declaration stating that it is time to pay more attention to increasing access to financial services and financial education for women. In a report that followed this declaration, the OECD—or the Organisation for Economic Co-operation and Development—said that greater access would bring women financial empowerment, greater opportunities, and improved well-being. These are outcomes that are sure to benefit everyone.


Courses, lessons, series
Building a Spending Plan, University of Florida IFAS Extension
Building Wealth, Dallas Fed
College 101 infographic, St. Louis Fed
Coping with a Money Crunch, IFAS
EconLowdown online courses, St. Louis Fed
Katrina's Classroom, Atlanta Fed
Major Financial Decisions, Richmond Fed
Money and Marriage: Saving for Future Use, IFAS
Money and Marriage: Making Financial Plans Together, IFAS
No-Frills Money Skills, St. Louis Fed
Personal Finance 101 Chats, St. Louis Fed
Personal Finance 101 Conversations, St. Louis Fed
Personal Finance 101 Financial Forms Explained, St. Louis Fed
Personal Finance Resources, federalreserveeducation.org
Teens and Media Use: Cell Phone—What's the Plan?, IFAS

Data source
Annual Retirement Survey, current and archived, Transamerica Center for Retirement Studies
Statistics, Women & Money Magazine

Information clearinghouses
UF/IFAS Extension (University of Florida/Institute of Food and Agricultural Sciences)
Savings Resources for Consumers, Federal Reserve Board of Governors
UF/IFAS Electronic Data Information Source (electronic publications)

News stories
"Women Know More about Finances Than They Get Credit For," The New York Times, May 17, 2013

Reports, papers
Fourteen Facts about Women's Retirement Outlook... and Seven Steps to Improve It, Transamerica Center for Retirement Studies, March 2014
"Financial Literacy around the World: An Overview," NBER Working Paper No. 17107, June 2011
G20 Leaders Declaration, June 19, 2012
Women and Financial Education: Evidence, Policy Responses, and Guidance , OECD, October 16, 2013

By Lesley Mace, senior economic and financial education specialist with the Jacksonville Branch of the Federal Reserve Bank of Atlanta

August 22, 2014