The Changing Tide

“Ms, what do you mean by APR? Why would it change,” one of my students asked.

I was a financial literacy teacher at night in Houston. I taught women, mostly women who lived in shelters, how to budget, how to choose between different credit cards, how to set up bank accounts, and how to create investment plans. The women in my classes were not unintelligent in any way. Some of them have college degrees. Most have some college education. However, one common thing had made it mandatory for them to take my class – low credit scores or worse, past bankruptcies. Frequently, I was the youngest person in the room.

One astonishing fact I observed, was the lack of financial education in general, especially among women in our society. Although gender gap in college education has more or less been closed in most western countries, gender income gap and investment gap still exist across different geographies. And this, has slowed women down.

Below is a graph published by the Financial Fitness Magazine.


One surprise to me was that the gender gap in financial and investment knowledge also exist at the top end of the income spectrum, in a different way. When I was an MBA student, my male classmates love discussing the latest investment ideas, regardless of which industries they intended to go into after graduation. In contract, the number of female classmates with whom I could have an investment discussion, were far fewer. I was a member of the investment management club during my MBA. When I tried to find 4 women to join a female-only stock pitch competition, I had to pull my teeth. ( And I eventually lured one of my consulting friends to join so that we could reach the head count.) In comparison, the education club, non-profit management club, retail club and even the management consulting club, had plenty of women.

There is a demographic shift in our society. The number of women who are single between the age of 18-34 is now more than the number of women who are married. Women are marrying later. More women, in fact, might never marry. This also has huge financial implication for us. If we never have spouse, children, we have less spending when we are young. But it also means we have less family safety net when we are old. There will be no husband transferring his retirement plan. No common retirement account. No child who could provide financial support in times of emergency. This would happen to single women as well as single men. But with less income and longer life span, women are vulnerable financially. Social security is running out. In a decade or two, we will see many elders, especially elderly women, not able to retire or won’t have enough money to stay afloat during retirement.

Stop looking at the pair of shoes on Gilt. Stop going to stores and get multiple luxury bags. Stop buying 30 groupon deals and never use most of them. Start saving. Start looking into retirement plan options. Start investing.



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