What's Limiting Women's Financial Literacy?

by Sophie Morgan

Due to historical and present-day exclusion from financial markets and the workforce, as well as gender roles, particularly in regard to martial roles, there is a significant financial literacy gap between men and women across various countries. 

How do marital and gender roles impact the financial literacy gender gap? 

A study in Spain (aguiar-diaz 2022) compared the financial literacy rates of single men, single women, married men, and married women. The study found that for women, being married had a negative impact on their financial literacy. The study theorizes that this is due to societal norms and division of domestic labor between married couples, with men often handling the family finances while women handle other housework. This theory was supported by the data collected on single men and women, finding that there was no significant difference in financial literacy between single men and women. A study in China (Preston, Qui, Wright. 2024) compared financial literacy rates amongst women in urban regions, with more progressive ideals regarding gender, and rural regions, that maintained traditional gender roles. Gender roles referring to culturally allocated divisions of labor amongst married couples: men taking care of finances and the household's income, and women maintaining the home and children, and how this varies in degree, as well as how encouraged and normative it is for women to be involved in the workforce. This study found that financial literacy amongst women is greater in urban regions where more women are involved in the workforce and finances at home. This makes sense because those who generate income have money to manage.  

How do women fair in financial markets they have been excluded from?  

We’ve discussed how involvement in the workforce or lack thereof impacts women's financial literacy, buts it also important to recognize gender discrimination in financial markets, female discouragement from financial markets, and general exclusion all together. A study in Pakistan (Zulfiqar 2022) examines gendered assets in Pakistan, specifically the assets reserved for women in the form of gold jewelry In Pakistan, women can't invest, save, or get loans from the bank. They are also unable to own land. How have they persevered? Wedding Jewelry. Women in the poor regions of Pakistan have transformed financial markets, creating a high demand for gold-backed microloans. Pakistani women have acquired their savings and financial agency via their wedding jewelry, that is often pawned off in these poor areas to pay for maintaining the home and resolving family crisis's. But due to the fluidity of these gold assets, the burden of debt is placed on these women, limiting their economic growth. 

Lack of interest or lack of confidence?

Women's lack of involvement in financial markets can be explained by exclusion and discrimination in regions like Pakistan, but in regions where Women have a fairer playing field in regard to finances, the gender gap can be attributed to a lack of confidence. It's often misconstrued that women's lack of involvement in financial markets is due to a lack of interest, but studies show that it is a lack of confidence, perpetuated by gender roles that discourages women from investing in their financial literacy. The previous study in China (Preston, Qui, Wright. 2024) used a survey to quantify financial literacy via 3 multiple choice questions about interest, inflation, and risk. The response options of these questions included an “I don't know” option that was more likely to be chosen by women. This data provides support that confidence is a contributor to the financial literacy gender gap. Knowing this, future studies can better cater to women in financial literacy education programs. An article in Australia (Warren 2019) relays the reasonings and findings of a financial literacy program targeting women in a refugee setting experiencing economic abuse, specifically women in marginalized groups like Aboriginals in Australia. The programs curriculum focused on economic empowerment for women, teaching financial literacy in three modules, with module 1 introducing concepts of economic abuse and module 2 & 3 developing the participants financial literacy skills. The program had the greatest positive impact of these women by giving them confidence in navigating financial matters. 

Why is it important to invest in women's financial literacy?  

Closing the financial literacy gender gap is essential to striving for gender equality. How can women prosper in a money-based world when their systemically held back? Exclusion from the workplace and financial markets, as well as fixed gender roles, have had a lasting impact on women’s economic growth. Additionally, a lack of financial literacy makes women vulnerable to economic abuse which can limit and impact financial security, employment, and accommodations especially in marginalized groups underserved by their governments like discussed in Warrens article (Warren 2019): Aboriginal and Torres Strait Islander communities in West Australia and those of CALD backgrounds. 

Conclusion

To conclude, present day and historical exclusion of women from financial markets have set women back in their financial literacy, in addition to the perpetuation of financial gender roles and the discouragement of women in financial fields, women across many regions and different environments are disadvantaged when it comes to navigating their money. 

References

Zulfiqar, Ghazal Mir. 2022. The social relations of gold: How a gendered asset serves social reproduction and finance in Pakistan. Gender, Work & Organization, 29(3), 739–757. https://doi.org/10.1111/gwao.12818 

Warren, A., Marchant, T., Schulze, D., & Chung, D. 2019. From Economic Abuse to Economic Empowerment: Piloting a Financial Literacy Curriculum With Women Who Have Experienced Domestic and Family Violence. Journal of Women and Social Work, 34(4), 498–517. https://doi.org/10.1177/0886109919868828 

Aguiar-Díaz, I., & Zagalaz- Jiménez, J. R. 2022. Women and financial literacy in Spain. Does marital status matter? Journal of Women and Aging, 34(6), 785–799. https://doi.org/10.1080/08952841.2021.1991194   

Preston, A., Qiu, L., & Wright, R. E. 2024. Understanding the gender gap in financial literacy: The role of culture. Journal of Consumer Affairs, 58(1), 146–176. https://doi.org/10.1111/joca.12517 

Martínez-Rodríguez, S. 2022. DIANA (1969-1978): the first women’s finance magazine in Spain. Feminist Media Studies, 23(5), 1889–1904. https://doi.org/10.1080/14680777.2022.2055606