Why Women Get Better With Money as They Get Older
In today’s families, women play a huge role in finances, as opposed to those we’ve had in the past. When looking at articles on women and finances, I found this one very interesting – “Women and Finances: Growing Older Makes Women Better with Finances.” In the article, a study conducted by Joanne W. Hsu, an economist at the Federal Reserve Board, proves that women do become more financially literate as they get older. The study revealed women have a stronger incentive to gain financial literacy as they approach widowhood.
Why is this study important? It’s becoming more and more important that women have an increased understanding of their finances as more are outliving their husbands and becoming their own CFOs. The study shows that one spouse, typically the man, will handle the finances in a marriage because the wife doesn’t enjoy doing them, doesn’t have much knowledge about finances, or it is simply a division of labor. Either way, it is important for women to have financial knowledge because they are outliving their husbands.
What does it mean for women to be more financially literate? This means that we will be making better investment decisions, managing health-care costs better, increasing our savings, managing our debt better, and planning our retirement better. As the responsibility of planning one’s retirement has shifted to individuals rather than relying on company pensions and Social Security, it has become more vital for women to gain financial knowledge.
According to Hsu, the study revealed, “Because the benefits of financial knowledge for women are not realized until she is a widow, the theoretical model predicts that a woman has an incentive to delay the acquisition of financial knowledge until later in life.” Based on the study data, Hsu found that approximately 80 percent of the women who participated would match their husband’s financial literacy before widowhood. Visit Genworth Financial for more information on how you