Living with credit

Women financially clueless? I think not

Kelly Dilworth

When it comes to managing money, women often get a bad rap.

Just do a Web search for the phrase “women and money,” and you’ll find dozens of articles, books and links to conferences lamenting women’s lack of financial know-how — as well as numerous sales pitches for financial services and coaching tailored specifically for clueless gals.

You’ll also find a number of studies that show that there’s some truth to the widespread assumption that women’s overall financial literacy could use some help. Women aren't as financially clueless as some think

A 2012 study from the nonprofit think tank RAND, for example, surveyed the latest international research on women’s financial knowledge and concluded that women around the world tend to not only be financially worse off than men; they also spend less time educating themselves about what they can do to better their lot.

“On average, women perform worse than men on tests of financial knowledge and have less confidence in their financial skills,” wrote the authors in the report.

Some studies have found that women are better than men at managing their household finances, wrote the authors — an important skill considering that many women make less money than men with similar jobs. However, “men tend to outperform in long-term planning, choosing products and staying informed.”

That’s not to say that women are completely at a loss.

Women sometimes outdo men
Despite faring poorly on some measures of financial competence, women may not actually be as far behind their Y-chromosomal peers as some researchers think, suggested financial literacy expert AnnaMaria Lusardi in a New York Times article published May 17.

Instead, they may simply be less willing than men to offer an answer to a question on a financial literacy test if they’re not completely sure. They’re also more likely to discount their abilities, said Lusardi, and admit that they know less about their retirement funds or about their credit card APRs than they should.

That rings true for me. I have yet to work up the courage to actually take a financial literacy test. (Since I write about this stuff each week, a barely passing grade would be particularly embarrassing.) And when someone asks me a financial question off-the-cuff (especially if it’s not about credit reporting and scoring — the two things that I write about most), I will often demur and refuse to answer until I can look it up and verify what I think I know.

However, I’ve also come across numerous (though admittedly limited) studies that have found that women don’t just rank somewhere close to men when it comes to financial knowledge and competence. They often beat them.

For example, the credit scoring company VantageScore just co-released a study earlier this month with the Consumer Federation of America that found that women actually outperformed men on a test of their credit score knowledge. Women not only knew more about what goes into a credit score and how it’s collected; they were also better informed about federal rules related to credit scores, such as lenders’ obligation to send them a free score if they’re denied a loan or given unfavorable terms.

And just this week, Experian released a study based on a sample of credit reports and scores that found that women, on average, are managing their credit better than men.

Among Experian’s findings:

  • Women are carrying less overall debt than men.
  • They’re less likely to pay their mortgage late.
  • They’re using less of their total credit limits.

Women also had slightly higher average credit scores than men, showing that despite persistent myths that women are shopaholics who max out their cards, the average Jane is doing pretty well.

Perhaps if we see more studies like this going forward, the cultural stereotype that women just can’t handle their money like men will finally go away.

That would be good news for young girls who could use a better cultural role model than the fashionably dressed debtor who regularly spends half her rent money on designer shoes.

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