According to the Financial Planning Standards Council 2016 survey of Canadians, women report more financial stress than men. For instance, 51% of women report losing sleep over financial stress compared to 40% of men. Another self-reported indicator is that 30% of women report feeling anxiety due to their finances, but only 17% of men do(1).
In my last post, I discussed that Canadians are having trouble aligning their financial goals with their habits resulting in financial stress in the marketplace.
So I dug a little deeper.
WHY do women specifically report more financial stress?
A Statistics Canada study revealed that Canadian women had lower financial literacy scores than men and were less likely to consider themselves “financially knowledgeable” (31% of women versus 43% of men). The same study also revealed that women are also less likely to state that they “know enough about investments to choose the right ones that are suitable for their circumstances” (48% versus 63%)(2).
An individual’s financial knowledge dictates their ability to plan, accumulate and manage financial assets. Therefore, a lack of financial knowledge goes hand in hand with financial stress and also has significant implications not just in the present but also in the future. The shift from defined benefit to defined contribution employer-sponsored pension plans with decreased coverage has placed more responsibility on individual Canadians to save and invest in order to finance their retirement years. To do so, there is increased pressure for Canadians to become more financially knowledgeable.
However, if we are not confident in our ability to analyze investment options, how can we invest? The answer, unfortunately, is that we don’t. According to a November 2017 Ratehub survey of 1,087 Canadians, 24% of women claimed they have no investments at all as opposed to just 15% for men(3).
When asked about their retirement confidence, only 41% of women versus 56% of men claimed to be confident about having enough funds for retirement(4). This finding is especially alarming considering that women also tend to outlive men by 5-7 years which means it is even more critical for us to have sufficient retirement savings.
It’s time to take charge and close the financial literacy gender gap
Ladies, let’s undermine this statistic. Let’s take control of our finances and improve our knowledge to take away this unnecessary stress. Women represent the majority of post-secondary graduates (in 2014, 57.7% of Canadian post-secondary graduates were women) so we clearly value the importance of an education(4); let’s also educate ourselves financially to improve our overall financial literacy. Do some research, talk to friends and family, meet with a financial planner – do whatever it takes to get comfortable with your finances and not lose sleep at night. Let’s close this financial knowledge gender gap and secure our financial future.
~ Anastasia Gazarek, The Savvy Saver