June 16, 2011

Women Lag in Financial Knowledge and Confidence Gender Gap: Study

Both women and men ‘woefully unprepared’ for retirement

Women still significantly lag behind men in their knowledge and confidence in virtually all areas of finance, even though the gap has narrowed since 2010, according to a report released Wednesday by Financial Finesse.

The report found that the gender gap was most prominent in investing and budgeting. Twenty-five percent of women reported feeling confident with how their investments were allocated compared with 42% of men. Significant here is a huge difference in women’s and men’s general knowledge of stocks, bonds and mutual funds: 64% and 84%, respectively.

Sixty-three percent of women said they had a handle on their cash flow versus 80% of men.

The smallest gap appeared in retirement preparedness, but both women and men are woefully unprepared, the report said. Only 12% of women and 19% of men were confident they would be able to replace 80% of their income in retirement.

On a more positive note, women and men are participating equally in their employers’ 401(k) or retirement savings plans,with 92% of women and 91% of men saving. Even so, women may be investing too conservatively to meet their income needs in retirement, according to the report.

Liz Davidson, chief executive and founder of Financial Finesse, said in a Q&A accompanying the study that the gender gap in financial knowledge had narrowed since the firm’s gender study in 2009, but cautioned that the difficult economy could undercut this progress. Longer term, two or three decades from now, she expects women to be at parity with men, if not ahead.

 “There is definitely a growing awareness among women, school districts and employers that this is a problem,” Davidson said. “As a result, we are seeing more employers offer financial education in a way that appeals to women, and more women are taking advantage of it. At the same time, there’s been a resurgence in female-oriented financial sites and blogs, which is a very good sign.”

Financial Finesse, based in El Segundo, Calif., provides financial education to corporations, municipalities and credit unions.

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