In today’s interconnected world, being financially literate is more important than ever before. As Lizzy Brahin, On the Money Magazine 2020-2021 President and current freshman at Harvard College, says, “Whether you are making a decision about college or a career, personal finance is a skill you need to have regardless of your background. It allows you to become financially independent, build wealth, and set yourself up for a successful future,” (Brahin, 2021). However, women have less knowledge of personal finance when compared to men, and are unable to fully participate in economic activities.
With the P-Fin Index responses of 2020, a 28 question survey for U.S. adults covering financial literacy topics developed by the TIAA Institute and the Global Financial Literacy Excellence Center, 27% of men answered the majority of questions correctly (22-28), whereas this number was only 12% for women (Yakoboski, et. al., 2020). This is a significant divide in confidence levels for personal finance. Financial confidence is closely related to financial well-being, and women lacking this personal finance knowledge significantly more, even in a well-developed country, is worrisome.
Not having the necessary knowledge in personal finance also translates to a lack of female representation in traditionally male-dominated fields. The gender gap in economics is the largest of any academic discipline, where women only received about 30% of doctorate and bachelor degrees in economics in 2014, which was the same statistic in 1995 (Dolar, 2021). Lacking equal gender representation in these fields may defer women from pursuing such careers. When referring to her first corporate mentor, Tracy Frizzell, Executive Director of the Economic Awareness Council, says “it is fantastic when young female business professionals can find role models like that, as it was very important for me,” (Frizzell, 2021). Such mentors foster future generations of women leaders.
More often than not, women display lower financial knowledge and confidence than men. Tara Falcone, the founder of ReisUp, believes it is important to “not shelter younger women [from] early conversations about money” (Falcone, 2021). Exposing women to financial education at an earlier age will equip them with the confidence necessary to make more informed financial decisions. Providing support for populations who are less financially literate will ensure everyone has equal chances for economic participation and opportunity.