Financial literacy matters. Here’s what we need to do about it

Personal Finance

It’s not just the young who are lagging behind.

There is also a financial literacy gender gap — and in 2019 it remains sizable.

While men correctly answered about 56% of the financial literacy questions, women only knew the answers to 47%. Not only does this gap stand tall, it is stubborn. It has persisted over time and surfaces for women in every age group.

When there is improvement in financial literacy, it is concentrated among those who started out with higher levels of financial knowledge, mostly men, or those with higher annual incomes ($100,000 or greater), leaving women further behind.

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The latest P-Fin survey also shows a clear link between financial knowledge and financial well-being, including the ability to handle a financial shock, such as unexpected medical bills or a needed car repair.

Financial well-being also means being on track to meet money goals in both the short and long term. Findings here tell us that people with higher financial literacy are on the path to more stable and secure financial futures.

In part, that’s because the financially literate are much more likely to plan for retirement and stay on course. They’re also better positioned to weather a shock. The government shutdown earlier this year was a stark reminder of what happens when you have no — or not enough — precautionary savings.

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