Women and money

8 March is the centenary of International Women’s Day. This year, we mark the occasion with a series of blog posts about initiatives to strengthen gender equality worldwide. In this post, Flore-Anne Messy of the OECD’s Directorate for Financial and Enterprise Affairs  discusses women and financial education.

Elderly women in OECD countries are 30% more likely than men to be poor. Women receive $75,000 dollars less pension on average over their lifetime than men, despite living 5.6 years longer. But whatever their age, poverty rates for women in OECD countries are higher than for men.

It’s not just that women generally earn less than men. Where money is concerned, there are also big gender differences in knowledge and skills. Research in the US and other countries shows that women are less likely than men to give the correct answer to financial knowledge questions. They are also more likely to lack confidence in their own skills, be cautious investors, and to have insufficient funds for retirement. This cautious approach does have advantages but can severely impact on retirement funds. Studies in the US suggest that women’s retirement pots are, on average, a third smaller than men’s.

Women are also more likely to think that dealing with money is stressful, overwhelming or boring. They are less likely to believe that money is important to a happy life.

Even when their behaviour reflects that of men – as with money management – they have lower levels of confidence in their own abilities.

Women also tend to be the primary carers for children. If their own level of knowledge and confidence in financial decision-making is low, there is very little chance that they will be able to transmit appropriate financial attitudes and sufficient skills to their offspring.

Moreover, given their typically lower average income, women’s opportunity to learn by trial and error is limited. Their finances are less likely to recover if they make serious errors in judgement. There is an  urgent need for the skills and knowledge necessary to help them make appropriate choices.

Women are however more likely to admit to a limited level of financial knowledge and skills. This, and a desire to learn more, means financial education can be successful. When they speak to a financial adviser, women in the US are more likely than men to want them to take the time to educate or coach them. In Australia, almost three-quarters of the women surveyed in 2008 recognised the importance of learning more about planning for retirement.

Women could thus benefit from a targeted approach to reinforce their financial knowledge and capabilities and influence their attitude. In particular, it seems that women may need to participate in exercises that improve their skills so as to increase their confidence to levels that enable them to become more active and assertive in their financial dealings. They would also benefit from interventions that highlight investing suitably for retirement, and provide the skills necessary to do so effectively.

As part of its broad project on Financial Education and Consumer Protection, the OECD has started addressing this particular issue in the framework of the International Network on Financial Education. Over the coming years, a group of experts will explore approaches to improve the financial literacy and financial inclusion of women in various countries, and develop guidelines and recommendations for countries seeking to work on this important issue.

Useful links

OECD work on gender


OECD work on financial education

Australian Government Financial Literacy Foundation: Financial Literacy Women: understanding money

Planning and Financial Literacy: How Do Women Fare? American Economic Review article from 2008 by Annamaria Lusardi,  and Olivia S Mitchell

Guest author

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