Addressing the gap in financial literacy among women

Tapping into knowledge and guidance can help enable financial empowerment.

Article published: May 28, 2024

Financial literacy forms the foundation of your relationship with money. With the right skills and knowledge, you can make informed and effective decisions with your finances. But with little focus on it in the educational system, financial literacy is uneven throughout the U.S., particularly among women.

In fact, an American College of Financial Services literacy study of men and women between 60 and 75 years of age found 35% of men passed a quiz on retirement income literacy, while only 18% of women passed the same test.

As Everyday Wealth co-host Soledad O’Brien recently shared during an appearance on the Cheddar News daily morning show Opening Bell, financial literacy is a critical tool for women. “Both [my co-host] Jean [Chatzky] and I recognize that feeling disempowered around your money is hugely problematic, and so we’re helping people really understand how to think about their money … and plan for the future.”


Women were disproportionally affected by the economic turmoil of the pandemic, with far more women stepping back or out of the workforce due to family demands. As the U.S. Census reported, women were more than twice as likely as men to not be working because of pandemic-related childcare issues. According to the U.S. Bureau of Labor Statistics, American women lost more than 5 million jobs in 2020, while men’s jobs increased during the same period. With more than 2 million women having left the labor market entirely, some experts predict the pandemic may set women back in the workplace by at least 10 years.

No matter what may be happening in the world, Everyday Wealth co-host Jean Chatzky says our “personal economy” is what most people feel each day and need to find ways to navigate. Most people want to understand how events happening around us may impact our own family’s finances. That’s where having the steady guidance of a financial planner can help.


Women’s financial disadvantage starts with the pay gap. Women make less than men – roughly 82 cents for every dollar men made in 2021, according to the Department of Labor. That means women are paid about 17% less than men. That also means they’re contributing less to their retirement account (in fact, the average retirement account size for a woman is 34% smaller than the average man’s account, according to Mercer), and they will have smaller Social Security payments upon retiring. If more women have that knowledge going into job interviews and salary negotiations, they can advocate for their worth and feel empowered in how they manage their financial journey.

While the U.S. has seen some progress in recent years, some experts estimate it may take more than 40 years before we see gender parity in pay. For this reason alone, it’s important that women learn to make the most of their money. O’Brien says turning to the experts is one way to help learn and gain peace of mind, one mission of the Everyday Wealth podcast.

“We know that women earn less money than men. We know that when women invest, they actually do as well or better than men. And we also know women are more in charge now of the household budget. So, for all of those reasons, not being empowered around making intelligent choices about your money and your current circumstances with money and finance, and also where you want to get to … that’s not good,” said O’Brien. “You need to understand what you’re dealing with. It’s also complicated. I mean, there are so many times we have conversations about not just how to save and how to invest, but all the implications of that. What are the tax implications? How do you send your kids off to college? How do you think about what funds you should you be in?”


Most American households have someone who serves a similar role to that of a company’s chief financial officer – the person with day-to-day responsibility for purchasing decisions, paying bills and taxes, and monitoring investments. It may not surprise you to know that, among heterosexual couples, it’s typically the husband who serves this role. Only 20% of couples (one in five) participate equally in financial decisions, with seven out of 10 men taking the lead on long-term financial matters, according to UBS’ 2021 Own Your Worth report. Couples overwhelmingly agreed that both partners engaging in financial decisions is crucial to achieving gender equality, but half of married women still defer that responsibility to their spouses, most (82%) doing so because they feel their spouses know more.

During the early days of marriage, both spouses may be fairly equal in financial knowledge and ability. But over time, if only one handles the finances, the other’s financial knowledge and skills can stagnate. So, in many cases, the husband keeps expanding his breadth of knowledge about personal finance, while the wife’s financial literacy declines. The longer they’re married, the greater this gap becomes. In instances of divorce, physical or mental incapacity, or death, the wife may need to suddenly assume the CFO role, and she may be woefully unprepared if she’s been largely uninvolved in managing the finances.


There are some foundational steps women can take to help gain financial empowerment and potentially create a more secure financial future:

  • Ramp up your savings. Be sure to fund your cash reserves account to the appropriate level so you have the financial flexibility you need to cover unforeseen expenses. Your reserves should be somewhere between three and 24 months’ worth of spending, depending on how stable your income is.
  • Maximize your workplace retirement plan and/or IRA savings. Participate in your retirement plan at work to the maximum extent you are permitted on a pretax basis. Depending on your Adjusted Gross Income, you and/or your spouse may still be eligible to contribute to a deductible IRA even after contributing the maximum to your company retirement plan.
  • Consider life insurance and long-term care insurance. With a longer life expectancy, women are more likely both to survive their spouse and to need long-term care – a major expense not covered by Medicare or health insurance. Buying life and long-term care insurance can help protect the financial strength you’ve built over the years.
  • Delay taking Social Security if you can. Unless your health or other circumstances prevent you from doing so, work full time to at least your full retirement age and take Social Security no earlier than full retirement age. Waiting longer can be even more beneficial.
  • Invest in a diversified portfolio. Consider remaining fully invested in the major asset classes and market sectors, using tax efficient investments and rebalancing your portfolio regularly.
  • Stay involved. If you’re married, schedule meetings with your spouse three to four times a year to review the status of your bank, investment and retirement accounts; outstanding debts (mortgage, auto, student loans and credit cards); and monthly expenses. Attend all meetings with your financial planner, tax preparer, estate attorney and insurance agents so you’re both knowledgeable and confident about your total financial plan. If you’re single, schedule similar check-ins with your financial planner.

A comprehensive financial plan – and leaning on expert advice – can build personal financial literacy and confidence over time.

“Money is not the number in a bank account, but what you want to do with it – the life goals you want to hit,” says O’Brien, who noted how she values the opportunity to work with Edelman Financial Engines wealth planners to ask questions and help people really think about strategies and planning.

Our firm was founded 35 years ago with the mission of providing fiduciary financial planning advice and increasing financial education for our clients. We continue that mission today, as we prioritize financial education through our webinars, exclusive client newsletters and articles to give clients the knowledge, confidence and advice they need to help achieve their financial goals. If you have questions about the steps above or you’d like to learn more about how a sound financial plan can help you achieve your goals, contact us to connect with one of our financial advisors.


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