Financial knowledge gap between women and men, survey finds

"They rate making money lower than caring for others."
"They rate making money lower than caring for others." Photo credit: Getty.

A new survey has found there's a financial knowledge gap between women and men.

Between January and June this year, the Commission for Financial Capability (CFFC) ran a survey among more than 3000 New Zealanders to measure their understanding of "basic financial concepts such as interest, inflation and risk diversification".

Only 22 percent of participants answered all questions correctly, with Kiwis having a generally good understanding of inflation, interest, and risk and return, but struggling with compound interest, risk diversification and the time value of money.

However, a gender gap has been identified by the commission, with only half as many women as men answering all questions correctly.

"Many women have a disconnect between not valuing money per se, and appreciating what money can achieve for them," says Retirement Commissioner Jane Wrightson. 

"They rate making money lower than caring for others, yet it is money that will enable them to look after their children and wider whānau."

A summary of the results says that in the youngest age bracket (18-34), men and women started with the same score, but men increased their financial knowledge with age. 

"New Zealand’s results are consistent with other OECD surveys in which women score lower on financial literacy tests than men, and show they are risk averse when it comes to investing," says Wrightson.

"Yet we also know that women are, on average, better than men at managing money in the short term, and when they do invest, are on average more successful than men."

The gender gap is said to be largest in understanding simple and compound interest and is similar across all ethnic groups.

Wrightson says that young women should be encouraged to care about money from a young age to overcome the gender gap. That means financial capability education is "essential" for girls at school. 

The commission's Sorted in Schools programme, which aims to equip young people "for their financial future", is now being used in 62 percent of secondary schools, allowing students to gain NCEA credits for learning financial capability. 

"This is helping normalise financial education, and making it a positive thing for girls and boys to be good with money."

The CFFC is also launching a Sorted Women course taught for women by women in workplaces and in the community. 

"All of us can help the young women in our lives by showing them that knowing how to make money work for you is an essential life skill. It will help them become independent, achieve their life goals and take care of those they love."

Find the full survey and results here.