Women’s participation in the economy has risen steadily over the decades when it comes to education, workforce experience and increased earnings. However, significant challenges remain that include a wage gap between women and men, as well as other barriers women face in growing their wealth.
When it comes to financial literacy, surveys have shown women feel less confidence than their male counterparts. New York Life’s 2024 Wealth Watch study found only 49 percent of women feel very or somewhat knowledgeable about building wealth, compared with 66 percent of men.
Those who have stronger financial literacy are able to use their knowledge and skills to effectively manage their money when it comes to budgeting, investing and saving for emergencies, retirement and other goals.
Key financial literacy statistics
- Around 1 in 4 working women (26 percent) did not contribute to their retirement between August 2023 and 2024. Among working women saving for retirement, 27 percent don’t know how much they need to retire comfortably (compared with 19 percent of working men).
- Nearly half (48 percent) of women are confident about their finances, although only 28 percent feel empowered to take action.
- Just over half of women (53 percent) are confident with managing investments, and less than half (44 percent) are comfortable creating a diversified portfolio.
- Female workers earn just 83 cents for every dollar male workers earn, based on median weekly earnings in the fourth quarter of 2024.
Sources: Bankrate’s home affordability report, McKinsey & Company Women in the Workplace report, Bank of America’s Women, Money, Confidence study, The Economics Daily report from U.S. Bureau of Labor Statistics
Impact of the gender financial literacy gap
Common pitfalls of a lack of financial literacy include the risk of getting into excessive debt, having an inadequate emergency fund or not saving enough for retirement.
Risk of excessive debt
A 2022 TIAA Institute financial literacy survey found that women answered an average of only 45 percent of personal finance questions correctly, whereas men fared significantly better with 55 percent correct on average.
Lack of knowledge of one’s financial options could ultimately lead to high-interest debt and less money in savings.
Women have 2.7 percent more student loan debt than men, according to Experian. When it comes to borrowing money for college, nearly 64 percent of all student loan debt belongs to women, according to the Education Data Initiative.
Inadequate emergency fund
The TIAA Institute survey also found that women with very low financial literacy are five times more likely to have difficulty making ends meet and three times more likely to be unable to handle a $2,000 financial shock, compared to women with very high financial literacy scores.
Not having enough money in an emergency fund could contribute to one’s debt level, whether through the use of a credit card or a personal loan.
Not saving enough for retirement
Another financial area in which research has shown women to be behind men is that of retirement literacy. A 2023 study by the BMO Real Financial Progress Index found just 53 percent of women feel confident about retiring at their target range, compared with a significantly higher 66 percent of men. What’s more, 74 percent of women have no financial plan in place to reach their goals, compared with 58 percent of men, the study found.
Mental health impacts
Bankrate’s Money and Mental Health Survey found that among U.S. adults who have money concerns that impact their mental health, 63 percent of women say a source of stress is paying for everyday expenses, such as groceries and utilities (compared with 55 percent of men). What’s more, 67 percent of women reported inflation/rising prices as another concern impacting their mental health, as compared with 61 percent of men.
Around 1 in 2 women (51 percent) say money has a negative impact on their mental health, at least occasionally, as compared with 42 percent of men, according to Bankrate’s 2024 survey.
Common sources of money-related stress include being in debt, not having a stable job, being unprepared for retirement and not having enough money for discretionary spending.
Difficulty making ends meet
For every dollar a man earns, women earn just 83 cents, which can make it more difficult for women to afford basic cost of living expenses, such as housing. Well more than half (61 percent) of American women say concerns about cost of living have increased, compared to 54 percent of men, based on a 2024 BMO Financial Group report.
More than two-thirds (38 percent) of women identified monthly bills as a barrier to making real financial progress, compared with 30 percent of men, according to the BMO Financial Group Report. It also found that 67 percent of women say keeping up with the bills causes financial anxiety, compared with 60 percent of men.
Ways you can improve your financial literacy
Due to having lower financial literacy rates than men, women may ultimately face obstacles when it comes to handling living expenses, building wealth, and managing loans and credit card debt.
The main way women can liberate themselves from the chains of major economic barriers — whether it’s pricey child care or the gender pay gap — is by growing their financial wealth.
— SARAH FOSTER | BANKRATE U.S. ECONOMY REPORTER
Some things Foster says women can do to brush up on their finances include:
- Practicing the zero-based budget model to ensure every dollar is put to work toward saving, investing or essentials
- Knowing how much you can afford to spend on discretionary purchases to avoid overspending
- Investing in the financial markets to ensure your wealth beats inflation over time
- Having a high-yield savings account
Additional ways you can boost your personal finance knowledge include:
- Read personal finance books. To save money, check out what your local library has to offer. Amazon Prime members also have access to many books for no extra charge. “The Psychology of Money” by Morgan Housel is a book that delves into how what you were taught about money could be affecting how you handle your personal finances now.
- Personal finance podcasts and blogs. Examples include The Wall Street Journal’s Your Money Briefing and NPR’s Planet Money.
- Courses from banks and credit unions. Many banks and credit unions offer free resources for financial education. For instance, Bank of America’s Better Money Habits page offers videos and articles, in English and Spanish, on topics such as budgeting, saving, retirement planning and owning a home. Capital One offers an online financial literacy course, along with Khan Academy, that covers budgeting, saving, credit, debt and retirement planning.
- Webinars from financial institutions. Various banks and credit unions offer a schedule of free webinars on financial topics. For instance, Suncoast Credit Union offers financial success programs on topics such as debt and budgeting, reviewing your credit report and handling student loans.
Tips for women on money management
Retirement: Studies have found women are behind men when it comes to saving for retirement. For instance, among those born from 1959 to 1964, the median retirement savings for women is $185,000, versus $269,000 for men, according to a 2024 study from the Retirement Income Institute and the Alliance for Lifetime Income.
“Taking advantage of an employer-sponsored retirement plan such as a 401(k) can also come with major tax savings,” Bankrate’s Foster says. “Contribute up until your employer match, or better yet, max out your annual contributions. If you want to go the extra mile, consider adding a traditional or Roth IRA to your portfolio.”
Savings: When it comes to saving money, women put away less than half the amount men saved in 2022, with women saving an average of $3,146, compared to the $7,007 saved by men, according to New York Life’s 2023 Wealth Watch survey.
“The worst mistake you can make is keeping too much money in a checking account, where it won’t benefit from the highest savings yields in over a decade (if you pick an online bank, that is) or compound interest in a retirement account,” Foster says.
Foster also advises taking advantage of a savings account that earns a competitive rate.
Investing: Just 64 percent of women see themselves as investors, compared to 76 percent of men, according to Fidelity Investments’ 2024 Women & Investing Study. What’s more, the study found that if given $25,000 to invest in the stock market, only 1 in 3 women say they’d know what to do, compared with 1 in 2 men.
For anyone looking to start investing, an employer-sponsored 401(k) plan could be a good place to start. For these retirement investment plans, the money is typically taken out of your paycheck automatically, and companies often match contributions up to a certain percentage of your annual salary, say 4 or 5 percent. What’s more, a 401(k) allows you to invest on a pre-tax basis, which reduces your taxable income during the years you contribute.
Other ways you can begin investing include using a robo-advisor, which is a digital tool to help you invest based on your goals, timeline and risk tolerance. You can also seek out a financial advisor for expert advice.
Bottom line
Increasing knowledge of personal finances is key for women looking to build up an emergency fund, start investing or get out of debt. Increasing one’s understanding of money management — no matter at what age it takes place — can lead to more confidence and better quality of life.
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