Unzipping Purse Power

An exploration of the importance of addressing the gender disparity in financial literacy levels for adolescent girls through financial education.

Helen Bitossi – Teacher of HSIE, Santa  Sabina College

In recent years governments around the world have acknowledged the ‘critical need to empower consumers through financial education’ and to build financial literacy skills.¹⁶ The investigations into financial literacy levels that have ensued have brought to light concerning evidence of a financial literacy gender gap not only in the developing world but also in western nations including Australia. It is crucial that focus is placed on engaging students, particularly adolescent girls in quality financial education to address this disparity.¹⁶

Studies suggest that issues regarding gender disparities in financial literacy levels exist in Australia. This includes a confidence gap between men and women when it comes to planning for the long-term financial future, ensuring enough money for retirement, being confident in one’s ability to understand financial language and being confident to invest, with men unsurprisingly having the upper hand.⁹ A recent study exploring financial literacy levels and ‘financial attitudes’ concluded that women aged 28 and above had ‘lower scores on average than men on financial knowledge and numeracy’.² The fact that women were using fewer financial education/information materials was identified as a core reason that underpinned this disparity.² There is a clear need to bolster the financial literacy skills and confidence levels of adolescents girls through the provision of quality financial education during secondary school years so they are more likely to engage with (and can more readily engage with) such materials in later life. Compounding an already present issue is the rhetoric in the media which perpetuates the message that it is the norm for women to have poor retirement plans and wealth and reaffirms to women the notion that it is not worth trying to change this position.¹⁵ An education that improves financial literacy among adolescent girls can play a key role in reshaping women’s own financial attitudes and behaviours.

Both philosophical and pragmatic arguments that support the need to engage adolescent girls in quality financial education can be considered. Hung, Yoong and Brown highlight the following motives for addressing gender disparities in financial literacy levels:

• Lower levels of female financial literacy and confidence may limit full female participation in the economy.¹¹
• Gender disparities in financial literacy may create vulnerabilities in terms of relative economic power within the household which can have flow on implications for women’s wellbeing.¹¹
• Leaving the issue unaddressed may lead to the continuation of financial literacy gender disparities and shape the next generation of consumers.¹¹
• Financial literacy disparities can further reinforce and exacerbate economic disparities that exist between men and women.¹¹

There are other economic factors that also provide compelling arguments for addressing the financial literacy gender gap that women face. Women tend to have shorter work tenures; often a reflection of the higher likelihood that time is taken out of the workforce for child rearing, have lower average earnings compared to men and retire with less superannuation making them more vulnerable to financial difficulty in their lifetime.¹⁰ The economic data in this regard offers strong support for the need to increase female financial literacy levels. The Workplace Gender Equality Agency highlights that the average man working full-time earns 18.8% more than the average full-time working woman with the gender pay gap in Australia having increased by 1.4 percentage points since November 2013.²⁰ This translates to an approximate gap of $700,000 in income over the duration of one’s career.⁴ When it comes to superannuation, a gap of 47% between men and women exists, and currently, women are retiring with $90,000 less superannuation on average than men.¹⁵ Very alarmingly, it is estimated that 29% of women over 65 ‘are living below the poverty line’.¹⁵ These issues are compounded by the fact that women live approximately 5 years longer than men on average and consequently, can be reliant on superannuation and retirement savings for a longer duration of time and potentially incur higher healthcare costs over their lifespan.^8;6;21

Financial education to develop financial literacy is arguably crucial for all adolescents entering an increasingly complex financial world but adolescent girls in particular are positioned to gain from the economic empowerment that can come from closing the financial literacy gap that exists. A financial education can impart knowledge of prudent financial management strategies, develop an awareness and understanding of personal financial issues, provide solutions to financial problems which may assist in the management of day to day finances, assist students to prepare for life events as well as to set financial goals and apply financial strategies.¹⁴ Women with higher levels of financial self-efficacy are also more likely to have investments in shares, managed investments and property as well as seek out advice from a financial planner.² The evidence gathered from developed countries highlight the importance of financial education programmes in the school and workplace in positively impacting financial literacy, particularly in regards to retirement savings.¹¹ Studies highlight the positive impact that financial literacy can have on financial behaviour and financial status.¹⁶ Evidence has unsurprisingly suggested that financially literate individuals do better at budgeting, saving money, and controlling spending.^13;18 A positive relationship has been found to exist between financial literacy and the handling of mortgages and other debts.^5;12 It is also suggested that financially literate individuals do better when participating in financial markets, planning for retirement and ultimately, successfully accumulating wealth.^19;7 From an employment perspective, financial literacy is also core in a suite of enterprising skills to now be recognised in international research as being ‘must-haves’ rather than ‘nice-to-haves’.¹⁷

Currently, all students in New South Wales have some compulsory exposure to financial literacy skill development within the curriculum. In Stage 4 Mathematics a unit within the curriculum focuses on financial mathematics with one of the course Outcomes being that students can ‘solve financial problems involving purchasing goods’.³  In Stages 5.1 and 5.2 of the Mathematics curriculum students once again engage with financial mathematics units by working towards outcomes that require students to  ‘solve financial problems involving earning, spending and investing money’ as well as ‘solve financial problems involving compound interest’.³ Commerce is also an elective subject offered in New South Wales for students progressing through Stages 4 and 5 and promotes the curriculum aim of enabling ‘young people to develop the knowledge, understanding and skills to research and develop solutions to consumer, financial, legal, business and employment issues in order to make informed and responsible decisions as individuals and as part of the community’ presenting educators with the best available opportunity at present within the scope of the curriculum to make inroads to bridging the gender disparity in financial literacy and increase girls’ confidence in navigating financial issues.³ Interestingly, records of student entries into Stage 5 Commerce as an elective subject since 1991 highlight that male enrolments in this subject in New South Wales have been consistently higher than female enrolments.³

Within the Stage 6 curriculum, students in New South Wales can choose to include subjects like Economics, Business Studies, Financial Services, Human Society and the Environment Life Skills and Mathematics (in particular General Mathematics which offers units of focus on Financial Mathematics) as part of their suite of subjects offering opportunities to further foster the development of financial literacy skills but again, not all students undertake such pathways, presenting a challenge to addressing the financial literacy gender disparity that exists.³ Looking forward, a new opportunity exists to engage students with financial issues and develop financial literacy skills with the future implementation of the subject Economics and Business within the Australian Curriculum as a mandatory area of study for students in Years 5-10.¹ One of the expressed aims of the Economics and Business curriculum is to develop students’ ‘understandings that will enable them to actively and ethically participate in the local, national, regional and global economy as economically, financially and business-literate citizens’ and the fact that all students will be exposed to this within a mandated curriculum framework is a step in the right direction towards ensuring girls are developing financial literacy skills early in their schooling.¹

Jan Owen (winner of the Australian Financial Review and Westpac Women of Influence Awards in 2012) agrees that enterprising skills like financial literacy ‘need to be embedded through primary to high school as the norm for girls’ and as educators, we certainly need to challenge ourselves to think about ways we can ensure this gap is reduced even within current curriculum constraints.¹⁷ Given that theoretically, adolescent girls have just as many opportunities as adolescent boys within the curriculum to engage with subjects that enhance -financial literacy skills, perhaps we as educators need to reconsider the way that we promote and deliver elective courses that provide opportunities for girls to increase their financial literacy skills. We do not want our girls to be allowed to remain ‘behind’ in this increasingly crucial skill-set and we want to empower them with the knowledge that they require to be financially savvy, prudent citizens and an increasingly complex financial world.

References

1. (2015). Economics and Business. Retrieved from http://www.australiancurriculum.edu.au/humanities-and-social-sciences/economics-and-business/aims
2. (2015). ANZ Survey of Adult Financial Literacy in Australia: Full Report of the Results from the 2014 ANZ Survey. The Social Research Centre. Retrieved from http://www.financialliteracy.gov.au/media/558752/research-anz-adultfinancialliteracysurvey2014-fullreport.pdf
3. Board of Studies Teaching and Educational Standards. (2015). Retrieved from http://www.boardofstudies.nsw.edu.au/
4. Boyd, T. (2015, July 28). The $700,000 gender pay gap David Gonski and Mike Smith want to close. The Australian Financial Review. Retrieved from http://www.afr.com/brand/chanticleer/the-700000-gender-pay-gap-david-gonski-and-mike-smith-want-to-close-20150728-gimecy
5. Campbell, J. (2006). Household finance. Journal of Finance, 61(4), 1553-1604.
6. Constable, S. (2015, June 14). Women, Especially, Are Failing Financial Literacy. The Wall Street Journal. Retrieved from http://www.wsj.com/articles/women-especially-are-failing-financial-literacy-1434129899
7. Christelis, D., Jappelli, T. and Padula, M. (2010). Cognitive abilities and portfolio choice. European Economic Review, 54(1), 18-38.
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9. Financial Literacy Foundation (2008). Financial Literacy: Women understanding money. Australian Government. Retrieved from http://www.financialliteracy.gov.au/media/209296/women-understanding-money.pdf
10. Fonseca, R., Mullen, K., Zamarro, G. and Zissimopoulos, J. (2010). What explains the gender gap in financial literacy? The role of household decision-making. Rand Labor and Population Working Paper Series. Retrieved from http://www.rand.org/content/dam/rand/pubs/working_papers/2010/RAND_WR762.pdf
11. Hung, A., Yoong, J. and Brown, E. (2012). Empowering Women Through Financial Awareness and Education. OECD Working Papers on Finance, Insurance and Private Pensions, Retrieved from http://dx.doi.org/10.1787/5k9d5v6kh56g-en
12. Lusardi, A., and Tufano, P. (2009). Debt Literacy, Financial Experiences, and Overindebtedness. NBER Working Paper Cambridge National Bureau of Economic Research. Retrieved from http://www.dartmouth.edu/~alusardi/Papers/Lusardi_Tufano.pdf
13. Moore, D. (2003). Survey of Financial Literacy in Washington State: Knowledge, Behavior, Attitudes, and Experiences. Washington State Department of Financial Institutions Technical Report, 3(39). Retrieved from https://www.researchgate.net/publication/265728242_Survey_of_Financial_Literacy_in_Washington_State_Knowledge_behavior_Attitudes_and_Experiences
14. Morcos, C. and Sebstad, J. (2011). Financial Education for Adolescent Girls. Women’s World Banking Organisation. Retrieved from http://www.womensworldbanking.org/PDFs/23_FinanEducationforAdolescentGirls.pdf
15. Nowak, L. (2015, July 3). Stop the fear based messaging when discussing female financial literacy. Women’s Agenda. Retrieved from http://www.womensagenda.com.au/talking-about/opinions/stop-the-fear-based-messaging-when-discussing-female-financial-literacy/201507035977#.Vbgkb2SqpHw
16. (2013). Women and Financial Education: OECD/INFE Evidence, Survey and Policy Responses. OECD Publishing. Retrieved from http://www.oecd.org/daf/fin/financial-education/TrustFund2013_OECD_INFE_Women_and_Fin_Lit.pdf
17. Owen, J. (2015, July 20). Corporate women: education in right skills will aid amazing women. Australian Financial Review. Retrieved from http://www.afr.com/opinion/columns/corporate-women-education-in-right-skills-will-aid-amazing-women-20150720-gig5un
18. Perry, V. and Morris, M. (2005). Who Is in Control? The Role of Self Perception, Knowledge, and Income in Explaining Consumer Financial Behavior. Journal of Consumer Affairs, 39(2), 299-313. Retrieved from http://www.thefreelibrary.com/Who is in control? The role of self-perception, knowledge, and income…-a0147928356
19. Van Rooij, M., Lusardi, A. and Alessie, R. (2011). Financial Literacy and Stock Market Participation. Journal of Financial Economics, 101(2), 449-472.
20. Workplace Gender Equality Agency. (2015). Gender Pay Gap Statistics. Australian Government. Retrieved from https://www.wgea.gov.au/sites/default/files/Gender_Pay_Gap_Factsheet.pdf
21. Wroth, D. (2015, July 17). Combating super gap for women. Money Management. Retrieved from http://www.moneymanagement.com.au/expert-analysis/tools-guides/combating-super-gap-women