Why financial literacy matters for women

The recent results of the Household, Income and Labour Dynamics in Australia (HILDA) Survey indicated a noticeable gap in financial literacy between women and men. Women demonstrated a much lower level of financial literacy than men.

What exactly does ‘financial literacy’ mean? HILDA uses the OECD International Network on Financial Education definition:

‘A combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve financial wellbeing.’

Using a five question quiz developed by Lusardi-Mitchell respondents were tested on basic financial concepts such as inflation, diversification, risk-return, numeracy and money illusion.

The results are pretty telling – 49.9% of men answered all five questions correctly, compared with 35.4% of women.

Other key findings:

  • Young people (aged 15 – 24) had the lowest financial literacy scores, particularly regarding inflation.
  • Singles have lower financial literacy than couples.
  • People with a university education had the highest financial literacy while those without a high school education had the lowest.
  • People with higher incomes and higher wealth had greater financial literacy.

OK, so why does this matter to women?

It matters because:

  • More women are joining the workforce and improving their earning capabilities.
  • More women are taking the role in their household as CFO.
  • More women are also in positions of being single parents.
  • The fastest growing group of people becoming homeless is single women over the age of 55.
  • Despite a shift in the labour force, women continue to be the primary caregiver and educator for the next generation.
  • Both men and women are dealing with the early wave of a sizeable transition of wealth from their parents and grandparents.
  • Lower financial literacy is correlated with lower lifetime financial outcomes.

What can women do to improve their financial literacy?

There are four simple steps that women can take starting today:

  1. Know why you give a shit – what are your goals and values and why is this important to you?
  2. Write down what you are confident with and what you’d like to know more about.
  3. Find a blog, free course, instagram account, podcast you trust and enjoy and follow along.
  4. Fill your gaps with experts – Google only gets us so far before we go to the doctor or the dentist, and the same principle applies for your financial wellbeing.

One of the biggest tools I advocate for in improving your literacy and financial resilience is learning as you go. Don’t wait for the stars to align and for you to know everything about how share markets work. It probably won’t happen! Start small, learn as go and then ramp up when you’re ready. Shares are very different when they’re your shares.

At Wealth Enhancers (WE) we speak with a lot of affluent women who feel that they could and should be doing more with their money. These women have been quietly hoarding cash until they reach a tipping point or a trigger where they reach out for assistance, education and support about what to do next.

Over a third of individual women that I meet and begin advising are coming to terms with the concept that a man is not a plan. They freely acknowledge that this has previously been their approach but as they move through their 30s, life has panned out a bit different and they’re making (financial) changes accordingly.

What can businesses do to support female literacy?

Businesses can acknowledge that the process for financial literacy is different for men and women. At WE, we not only see differences in the types of questions asked by men and women, but also in HOW women ask questions. Men tend to ask more direct and specific questions, often over emails with a very quantitative answer. Women will spend more time asking the how, what, and why around the concepts behind what we’re doing, to understand from first principles.

I’ve witnessed this from my own personal experience. I’ve also received feedback from my female members that when they’ve asked these types of questions to product providers, it was often construed that women were a few beats behind or not quite following. But it’s really more around women confirming their understanding and getting a grass roots level of knowledge. 

Women are asking more questions not just to “get it” but to deeply understand what they are doing, why they are doing it and how it’s going to help them.

The results from the HILDA survey is a reality check that shows that there is ample opportunity to improve financial literacy in Australian society – especially among women. Don’t rely on someone else to be financially literate for you – start taking steps to educate yourself. Your future you will thank you for it. ♀️💰

Author Bio




Rebecca Pritchard is a Gladiator and Financial Coach at Wealth Enhancers.


Not a Clover customer? Get your free customised investment plan. 🍀

Already a customer? Refer a friend and get $5,000 in assets managed for free for life! 🍀