Women Still Trail Men in Financial Knowledge

Across generations, women have trailed men in financial knowledge — but the gap may be closing, according to a multi-year study by the FINRA Investor Education Foundation.

The study examines financial and investor literacy scores across generations of boomers, Gen Xers and millennials by looking at the average number of correct answers on a basic five-question financial literacy quiz broken out by gender and generation at three points in time — 2009, 2012 and 2015.

Gap narrowed for millennials

In 2015, the gap in financial literacy between boomer men and women was 19%, and for Gen Xers 18%, according to the study. But for millennials, it was only 10%.

The gender gap for boomers and Gen Xers did not change from 2009 to 2015, but the gap for millennials narrowed, the study finds.

In 2009, the financial literacy score of millennial men was 0.60 higher than the score for women. In 2012, the gap narrowed to 0.40, and in 2015, it dropped further to 0.26.

“It is encouraging that the gap in financial literacy and self-assessed financial knowledge appears to be narrowing for millennials — a trend that bodes well for women in the future,” said FINRA Foundation President Gerri Walsh in a statement.

What could explain the gender gap in financial literacy and the narrowing of the gap for millennials?

Access to financial education

According to Walsh, “while a number of factors might influence these changes, access to financial education could be making a difference as men and women with higher financial literacy scores reported participating in financial education in high school, college or the workplace.”

The study finds that for every generation, men were more likely than women to report having been offered financial education. This could be due to the fact that men are more likely than women to be employed full time, and financial education is often delivered through the workplace, according to the study.

In addition, the study also finds that millennial women report that they were offered financial education significantly more often than boomer women and Gen X women.

According to the study, 33% of millennial women state that they have been offered financial education compared to 23% for boomer women and 27% for Gen X women.

Similarly, millennial men were offered financial education more often than boomer men and Gen X men, suggesting that financial education is a relatively young field and that it may have become more available in recent years. The study finds that 43% of male millennials report they have been offered financial education compared to 30 and 35% for male boomers and male Gen Xers, respectively.

Ability to make sound financial decisions

Financial literacy has been linked to wealth accumulation, stock market participation and retirement planning. Investor literacy involves knowledge of investment concepts.

“Lower levels of financial and investor literacy among women may impede their ability to accumulate wealth and make sound financial decisions,” Walsh said in a statement. “These findings have the power to help researchers and policymakers better understand how and why men and women make financial decisions.”

The study uses data from the FINRA Foundation’s National Financial Capability Study, which surveyed more than 80,000 American adults in 2009, 2012 and 2015 on four key components of financial capability. The study also included a detailed analysis of 2,000 respondents surveyed in 2015 who hold investments in non-retirement accounts.

Researchers analyzed gender data across three generations of respondents — millennials, born between 1980 and 1991; Gen Xers, born between 1965 and 1979; and boomers, born between 1950 and 1964.

Emily Zulz is the staff reporter for our ALM Media sister-site, ThinkAdvisor. She can be reached at ezulz@alm.com.