Gender Gap in Financial Literacy

The OECD's 2020 International Survey of Adult Financial Literacy underscores a persistent gender gap in financial knowledge, even in developed countries.

Despite women often having higher educational attainment, they consistently score lower than men in understanding key financial concepts such as inflation, interest rates, and diversification. This lack of financial literacy can have significant implications for women's economic well-being, including their ability to make informed investment decisions, plan for retirement effectively, and reduce financial stress.

One reason for this gap might be something called “stereotype threat”. This is a psychological issue where people perform worse in areas where their group is stereotyped as being less capable. In financial situations, women might experience this stereotype threat, which lowers their confidence and affects their decision-making. Society also plays a role, as finance is often seen as a male-dominated field, which makes it harder for women to feel confident in their financial skills.

The OECD report also talks about “financial resilience”, which is the ability to handle and recover from financial shocks. Women generally have lower financial resilience than men, partly because they often earn less, take time off work for caregiving, and live longer. These factors make it harder for women to save money and build wealth, leaving them more vulnerable during financial crises. The survey found that women are more likely than men to struggle with covering their living expenses, both in the short term and during long periods without income.

Behavioral differences between men and women also contribute to this gap. Women tend to be more cautious and less confident in their financial decisions, which often leads them to avoid high-risk investments like stocks. While being careful can protect against losses, it can also limit opportunities for financial growth and leave women less prepared for retirement. Additionally, women are more likely to focus on immediate financial needs rather than long-term planning.

Can targeted financial education help close the gender gap in financial literacy?.

The OECD believes that financial education is a key tool in addressing these differences. Programs specifically designed for women can help improve their financial knowledge and resilience by focusing on the unique challenges they face. For example, some countries have created financial education programs for low-income women, female entrepreneurs, and older women to help them make better financial decisions.

However, reaching women with these educational programs is still challenging. Many women lack confidence in their financial skills and have limited time for financial education due to responsibilities like caregiving. Financial education programs must also be designed carefully to avoid reinforcing gender stereotypes. They should be part of broader efforts to improve women’s financial outcomes, such as addressing the gender pay gap and supporting women’s participation in the workforce.

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Our Commitment in Orka Ventures

We care about financial inclusion, especially for those who are underserved. Our goal is to connect the power of technology to deliver easy-to-use financial platforms that make money management simple and accessible to everyone. With our tools, everything can be done right from your cell phone, ensuring that financial planning and decision-making are as easy as possible.

We also strive to reduce stereotypes in finance by using inclusive marketing and creating a welcoming environment within our company. At Orka Ventures, we believe everyone deserves the confidence and knowledge to take control of their financial future, and we are committed to making that a reality through our innovative solutions.