Research suggests advice to women: join the financial conversation
Wednesday, February 18, 2015
New research from Kansas State University finds a significant gender gap when it comes to financial capability - a finding that is especially concerning because many women will be the head of a household at some point in their lives.
"Financial capability, which is the measure of what people think they know versus what they actually know, becomes more important than just measures of whether or not men know more about finances than women," said Cliff Robb, associate professor of personal financial planning in the university's College of Human Ecology and study author.
In the study, the researchers wanted to see how knowledge carries over into behavior, Robb said.
The study, "Financial Knowledge and the Gender Gap," found Americans in general display low levels of financial knowledge and capability, but women are less financially capable. The gender gap of capability expands across all ages, but is most prevalent among women younger than 35 and older than 55. The gap increases with age, with older women having a larger gap in capability compared to the capabilities of younger women.
"About 1 in 4 households in America are headed solely by women and 39 percent of those homes have dependent children," Robb said. "If women heading households are less capable, that has huge implications for their own well-being, as well as the economy and future generations."
Studies show women are less interested in finances, which may be because of cultural views of the household or historically male-dominated professions, such as the finance industry, according to Robb.
He encourages women to be part of the financial conversation.
"We need to do a better job of engaging females at younger ages and encouraging females of all ages to be more proactive," Robb said. "If you're in a household that's decided to split the tasks in terms of financial planning, it's always good to have discussions about it and plan together."
The study, which used public data, was presented at the annual meeting of the Academy for Financial Services by Robb and two co-authors affiliated with the University of Georgia.