This International Women’s Day Sarah Porretta, strategy and insights director at The Single Financial Guidance Body, shares some findings from our latest survey on how UK adults manage money.
Women’s financial needs are often shaped by specific challenges, including low incomes, time taken out of the workplace to look after children or older relatives, or dealing with a life event, such as divorce, separation or bereavement, all of which can leave women worse off compared to men in the same situation.
In our 2018 Financial Capability Survey, we’ve taken a deeper dive into the financial capability and confidence of women compared to men across all adult age groups and all income levels to see what’s happening. The results show some encouraging signs but also highlight areas where those of us engaged in the delivery of financial capability can better support women (and girls) to make the right financial choices at the right time in their lives.
Younger women are closing the numeracy gap
So first the good news. There is evidence that younger women are showing signs of greater financial numeracy. While women overall were less likely to give the right answer in financial numeracy tests in our survey, younger women from the Generation X and Millennial cohorts (those born between 1966 and 1995) did as well as or even outperformed men in certain numeracy questions.
This could partly be down to the numbers of women who stay in education for longer compared to previous generations as our evidence also showed that the more highly educated women are, the more likely they are to be financially numerate. According to the Office of National Statistics figures, the numbers of young people aged 18 to 24 going onto higher education doubled from 1992 to 2016, with one in three of all young people studying full-time and women now outnumbering men.
Women show more control over spending than men
Women of all ages in our survey also displayed greater financial self-control than men and are less likely to overspend or take out short-term high cost credit, such as pay day loans. Although having dependent children was likely to increase overspending in both genders. Younger people are also more likely to use credit than older generations who tend to save for things first.
Relationship strain and talking about money
Of course, one partner overspending can have a negative impact on household finances, relationships and children which is why we are keen to encourage open and honest conversations about money through our #TalkMoney campaign. Our Money Advice Service consumer guides How to talk about money and Talking about money to your partner give great tips on how to deal with different attitudes and motivations as well as specific problems such as gambling or debts. The guides are useful resources for frontline practitioners too.
Women show lower confidence when planning for the future
However, while younger women are displaying signs of greater financial numeracy and financial self control – both essential building blocks for creating good financial capability – our survey also highlighted their confidence in planning a secure financial future still remains slightly lower than men of the same age and older generations overall. They are less likely than men to buy income protection insurance or medical insurance, for example.
This is something we are very keen to address. Introducing the concepts of financial capability into young people’s lives in the early years and ensuring that it continues throughout their education is one of the key Calls to Action for the newly-formed Single Financial Guidance Body (SFGB).
The role of financial education
Its aim is to ensure the provision of meaningful financial education for 7 to 17-year-olds in settings which match their needs. This could involve supporting girls and young women to start thinking earlier about planning for their own gender-specific financial needs in context of what may happen in their lives, such as buying a home, saving for retirement, having children or living with a partner.
The pension gap
The other significant (and potentially worrying) finding in our survey was women’s attitudes towards pensions. They appeared to lag behind men in all aspects of pension and retirement planning. Even women in employment, compared with working men were less interested in pensions and seem not to have actively planned for retirement. This difference remains throughout our working lives and decreases slightly only when women are over 35 years old and if they earn more than £25,000. Women’s interest in retirement planning only comes close to men’s when they are nearing retirement age, by which time it may be too late to ensure a decent pension income.
Of course, women face challenges when saving for retirement particularly as their incomes tend to be lower than men’s, reducing the ability to save. Also, taking time out of the workplace or reducing working hours to have children or care for older relatives means they can lose a significant amount in employer pension contributions, while also potentially missing out on National Insurance Contributions to build up a full State Pension.
The role of employers
Employers therefore have a vital role to play in financial wellbeing and supporting women to make considered financial choices when they become parents. Offering maternity packages that continue to make pension contributions at pre-maternity leave salary, for example, can reduce some of the shortfall. If this is not possible, making sure that female employees (and their partners) are aware of things they can do to keep up with contributions towards both workplace pensions and State Pension can help all employees to make informed decisions at the right time.
Contribute to the UK’s financial capability
Overall, our survey shows that understanding the differences between men and women’s behaviours towards money and financial capability — so that we can tailor financial education to gender and age groups — will be crucial to the success of the UK’s long-term Financial Capability Strategy.
As the new guardians of the strategy, the SFGB will soon be holding a series of listening events around the UK where employers, practitioners and organisations who work with people to deliver financial capability or promote financial wellbeing are invited to tell us in person what they would like us to deliver.
We would really like to hear more about your experiences and your views, including how we can work together to help women and girls of all ages and incomes overcome the cultural or social barriers to accessing financial education and ultimately empower them to make independent, informed and confident decisions throughout their lives.
If you would like to hear more about this work, and find out how you can contribute, you can sign-up for our newsletter.