Number of the Day Shows Gender, Income Gap in Money Savvy
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That’s how few questions women from lower-income households answered correctly on a test of personal finance literacy, according to survey findings from TIAA Institute released this week.
While financial literacy is low among U.S. adults in general, women tend to be less knowledgeable than men, the survey showed, and the gap between women in different income brackets is stark. Women with household incomes of at least $100,000 got an average of 58% of the quiz questions right, a full 25 percentage points more than women in households who made less than $25,000. Test-takers answered questions on borrowing, consuming, saving, earning, comprehending risk, investing, and insuring, among other topics.
The TIAA Institute-GFLEC Personal Finance Index, an annual measure of financial literacy, reflected 1,008 U.S. adults surveyed in January, just before the COVID-19 pandemic reached American shores. This year’s version included an oversample of women so that researchers could focus on trends within that group. The institute found that African American and Hispanic women were less prepared than their White counterparts to face the financial challenges of the pandemic, scoring correctly on an average of 38% of questions versus 54%.
“The combination of precarious personal finances and low financial literacy results in poor financial resiliency,” TIAA Institute Senior Economist Paul Yakoboski wrote in a press release. “This only amplifies the challenge of weathering what would have been very difficult financial circumstances in any case. As the United States moves past the pandemic and its economic consequences, taking steps to improve American women’s financial literacy will be essential to boost their financial resilience.”