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Improving financial literacy for women is a necessity

Many Australians struggle to manage their money, and one in three people find dealing with money stressful and overwhelming. Increasingly complex financial choices and products require people to have ever greater knowledge about financial matters and understand the consequences of their financial decisions. But what exactly do we need to know to achieve this threshold of knowledge, and who do we learn from?

One way to better understand where the threshold might lie is to rank people’s level of financial literacy by responses to a series of five questions (see below) on compound interest, inflation, and risk diversification. Not surprisingly, researchers using these questions have found that people with higher financial literacy scores save regularly, engage in long-term planning, are willing to take appropriate financial risks and ensure they have emergency savings.

Unfortunately, evidence consistently shows that being a woman increases the likelihood of lower financial literacy scores. This gender gap widens over time, painting a concerning picture for aging single women. Addressing this gap is a matter of equality and a critical step towards empowering women to take control of their financial futures.

Closing the gender gap in financial literacy is not just a moral imperative; it’s an economic necessity. Financial literacy equips women with the knowledge and confidence to build wealth and achieve long-term financial goals. By rethinking traditional approaches to learning about financial concepts at school, providing financial education resources in the workplace, and harnessing the expertise of experienced investors, we can find new ways to close the gender gap in financial literacy. Delivered alongside structural change to equal pay and childcare affordability, women’s full potential can be reached as investors, savers and contributors to economic growth.

Understanding the gender gap

The gender gap in financial literacy is a multifaceted issue influenced by various societal, cultural and economic factors. Historically, women have been less involved in financial decision-making, leading to less exposure and experience in managing money and investments. This disparity is further exacerbated by differences in educational opportunities, workplace dynamics, and cultural norms surrounding money and finance.

The significant impact of the ability to generate income on an individual’s financial well-being should not be underestimated. Participation in adequately paid work makes it easier to cover expenses, acquire assets and accumulate emergency savings. It is also associated with a greater sense of personal satisfaction, choice, and control over their financial situations.

It is well-documented that women, on average, earn less than men for the same work. Several factors, including gender stereotypes, lower wages for female-dominated industries, inflexible working conditions, time out of the workforce due to caring roles, and gender discrimination, contribute to this difference. Having lower incomes and experiencing barriers to workforce participation, such as childcare costs and availability, significantly impact women’s current and future financial circumstances.

Another issue is that gender stereotyping regarding work and pay can start surprisingly early. In the home, boys are paid more pocket money while girls are expected to do more inside chores without pay. Research also shows parents starting money conversations with boys at a younger age is important because more frequent parent-child discussions correlate to more favourable financial attitudes. Moreover, men are more likely to be the primary decision-makers on saving, investing, and borrowing. Watching their fathers take a more dominant role in financial decisions, and mothers take a lesser role reinforces and perpetuates gendered roles in households and has consequences for girls as they mature and enter romantic partnerships.

Another distinctly inherent female trait is to avoid risk-taking. For financial decisions, this means that women may not participate in share investing and benefit from potentially higher returns. Taking calculated financial risks increases the probability of achieving greater wealth, but people perceive the risk differently. Risk perceptions may be linked to a person’s status and control over their circumstances. Emerging research shows that people with high incomes, high levels of education, and high levels of trust in authorities have the lowest perceptions of risk, and these people are more likely to be white males. Accordingly, reducing women’s discomfort with taking financial risks is an important undertaking, and good solutions are likely found in socialising stock investing with other women and female mentors.

Finally, critiques of the financial knowledge questions outlined above include issues like reliance on self-assessment, potential for random guessing, and misunderstanding due to question framing. Research indicates that gender differences in decision-making under uncertainty exist, and as such, multiple-choice questions favour men. The questions also include numerical components, as numeracy skills are essential for financial decision-making.

However, studies show women have higher math anxiety, leading to more skipped questions or choosing the non-response ‘Do not know’ answer options. Therefore, the question framing may be disadvantageous for women, and unfortunately, the findings perpetuate the stereotyping that women lack financial knowledge. However, it also highlights that women lack confidence in answering these questions and need further support. Whether that is in deconstructing the question, understanding the context, or disentangling the knowledge from mathematics is yet to be well understood. Researchers have raised concerns that the reliance on mathematics for teaching financial concepts in school may disengage many girls.

Bridging the gap: Strategies for improvement

Closing the gender gap in financial literacy requires a concerted effort.

Firstly, there is a need to improve current approaches to building financial knowledge at school. The gold standard would be to mandate a standalone personal finance course in high school, as now occurs in 25 American states. In the absence of a standalone course, a change in approach to the delivery of financial literacy within mathematics would be effective. The exclusive focus on formulae to derive a correct answer does not represent real-world problem-solving. Using stories to help deliver content and assessment that elaborates context would help girls seek the support needed to complete the task and build confidence.

Secondly, experienced investors can share their knowledge and expertise by taking up or creating mentorship opportunities, which may include facilitating discussions at schools, workplaces or with community groups. Fostering peer learning and support networks where women can share experiences, knowledge and best practices related to personal finance and investing is beneficial. Initiatives that target women in under-served communities are also vital to addressing the gap and the intergenerational transmission of low financial literacy.

Third, workplaces can extend their existing employee assistance programs to include financial well-being objectives and provide members with financial education resources, seminars, and access to financial advisors. Furthermore, workplaces can promote equal pay and career advancement opportunities for women.

Finally, raising mothers' financial literacy and economic empowerment will significantly benefit daughters. Achieving this requires a collective effort to remove structural barriers and shift social norms and stereotypes.


Dr Tracey West manages Talk Money, a school financial education program. Talk Money is funded by Ecstra Foundation, an independent charitable foundation committed to building the financial well-being of Australians within a fair financial system.


The five financial literacy questions

1. Suppose you had $100 in a savings account, and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?

More than $102 | Exactly $102 | Less than $102 | Do not know | Refuse to answer

2. Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account?

More than today | Exactly the same | Less than today | Do not know | Refuse to answer

3. Please tell me whether this statement is true or false. “Buying a single company’s stock usually provides a safer return than a stock mutual fund”.

True | False | Do not know | Refuse to answer

4. If interest rates rise, what will typically happen to bond prices?

They will rise | They will fall | They will stay the same | There is no relationship between bond prices and the interest rate | Don’t know | Prefer not to say

5. A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage, but the total interest paid over the life of the loan will be less.

True | False | Don’t know | Prefer not to say

Notes: These questions were included in Lusardi, A. and Mitchell, O.S. (2011) Financial literacy around the world: an overview, Journal of Pension Economics & Finance, 10(4), 497-508; correct response below.





1.More than $102
2.Less than today
4.They will fall


Dr Tracey West
March 11, 2024

Thank you to Peter, Ken, Alan, Steve, David, Tony, Pete and Sue for your constructive comments. Authors are advised to avoid footnotes and references.
Plenty of data sources provide evidence that women are paid less than men for the same work. Despite this not being legal, it happens. In my former workplace, the workaround was to pay a salary loading that was not disclosed in a departmental budget.
The ATO Tax Stats show that women earn less than men in 96% of all occupations, including being an anaesthetist, school principal, finance manager, bank teller, police person or legal professional. Even in women-dominated occupations such as midwifery, male midwives earn more than female midwives.

Here is an article that utilises the ATO Tax Stats:

Understanding how unconscious bias in the workplace manifests is worth an investment of your time Peter, Ken, Alan, Steve, David, Tony, Pete and Sue. This is especially true if the financial services industry seeks to attract more women.

March 11, 2024

I, as a female agree with the comments above. The quiz was a 2011 quiz. There were no sources for gender discrimination on pay. I agree there should be equal pay for both men and women. However if someone has 10 years experience and someone has 2 years experience at the same job . The person with 10 years should be paid more. Does not matter the gender

March 10, 2024

Financial literacy is knowing the language of finance.

Financial numeracy is applying numbers and arithmetic to finance formulae.

A dash of algebra helps both.

And computeracy and spreadsheetacy eliminates tedious manual calculation.
^^^--- Start there.

March 10, 2024

I'm male. I want to be the CEO of an ASX 200 company. Would people please start protesting in the streets and writing to their MP demanding they assist me with my demand. After all I deserve it. That sounds fair to me.

March 11, 2024

Peter, you don't get it. If you are good enough to be CEO but there are obstacles that prevent you from becoming one, that is wrong and needs addressing.

I am Asian and work in finance. Asians account for around 25% of the Sydney population, yet the number of Asian CEOs in finance - I actually don't know any though they must be some somewhere.

Why? It probably isn't racism. It's more likely cultural. That is, loud talkers in meetings are thought of as smarter and 'leaders' versus those who are more quiet and introverted. Also, those who enjoy beers and rugby are likely to be seen as more 'client friendly' etc.

I'd hate to be an Asian women - the chances are being a CEO in finance would be next to zero. The barriers would seem insurmountable, no matter how good that you.

That's the point and you need to stop looking at yourself and see things from others' points of view.

March 13, 2024

Respectfully, not quite correct Ken.

Asians in finance is a sub-set (smaller number than) of Asians in Sydney; not all Asians will go into finance.

Of which, there are two VERY famous ladies who are at the top of their game; Shemara Wikramanayake (topped the reported earnings table for successive years; $16 million in 2021 and $23.7 million in 2022; highest paid CEO in Australia) and Verena Lim (Macquarie Group's Asia CEO).

On top of that, add Inderjit (Indy) Singh OAM (Chairman of Fiducian), who is a very good Asian-Australian businessman.

So, your assertion that 'the chances of being a CEO in finance would be next to zero' are not quite right and certainly not 'insurmountable', because two ladies proved that wrong.

Indeed, seeing things from others' points of view (from what you just said) is the very issue.

I'm a white male, 5'6", quite extroverted, but don't just talk in meetings and over people for the sake of it, and not into the 'culture' of beers and watching sports (I actually _do_ MMA 4x a week instead of watching it, so I'm no shrinking violet)...but purely because of my "below average height", I am thought of as 'not being able to have people listen to me or think of me as a leader' and so, am not considered 'leadership material', when most male CEOs and world leaders are over or near 6'0.

To get noticed, I feel that I either need to be a clown or a tyrant (and then you get compared to Napoleon).

Nothing against them (and I actually support them), but it's actually EASIER for my shorter, female colleagues to be thought of as leaders and move into those roles because they don't have the same attitudes from men towards them because of their (lack of) height, not to mention the number of "affirmative action" programs in place to help them get there. Consider THAT.

March 10, 2024

Life skills need to be taught throughout the whole school system. Students should have to reach a minimum standard before advancing to next year. Topics should include career and business planning, goal setting, key life decisions, budgeting, investing, health, stress management, relationships, etc. Victim blaming doesn’t help anyone! Tribalism dividing us by gender, race, religion is destroying the fabric of a cohesive tolerant society.

Kirsty A
March 08, 2024

The comments here are the reason why there remains a problem. Given our huge and long running productivity problems, it's time to look in the mirror, fellas.

March 08, 2024

Sorry you feel this way Kirsty but all the comments below seem to be saying is that articles like this need to be a bit less sensationalized and try to show more than a superficial difference as the gender pay gap report does, every year. Same pay for same job is the law, so differences are due to the jobs different genders choose to pursue. As girls tend to do better at school their financial literacy should be at least as good as the boys.

March 08, 2024

I am disappointed this article makes a gender argument out of something that is fundamental to all people. Financial literacy levels in Australia need to lift dramatically for everyone. Both men and women benefit equally from improved financial literacy. It is growing tiresome that people take important issues that impact everyone and try to turn them into gender dis-equality arguments. Most of us see through it and it is polarising. There’s not a single person, man, woman or otherwise who doesn’t benefit from improved financial literacy.

Tony Reardon
March 07, 2024

"It is well-documented that women, on average, earn less than men for the same work." This is illegal so is clearly not well-documented.

March 08, 2024

Spot on Tony. There seem to be quite a few claims in this article with no references to support them, I think a big (not necessarily bigger) problem in this country is financial literacy of the media and so-called financial education programs. The recent "gender pay gap" report is a classic example. Yet again men earn more than women, but there is no comparison of like for like jobs, just the average wages/salary by company or in the country as a whole. Some companies (retail, womens clothing) had thousands of women, often low paid shop front assistants, and less than 100 men, usually in head office (accountants or the like). The average pay of the 65 men was higher than the average of the 2000 women, so this company had a massive gender pay gap??? Zero comparison of the job responsibility/qualifications/experience needed etc. So long as this downright misleading presentation of data goes on the reputation of the professional media will continue to slide.

March 07, 2024

Where is this country going when we appoint people based on their sex and not on merit? This has to stop as it puts the entire Australian population at risk.


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