Financial literacy is the ability to process economic information and make informed decisions about financial planning, wealth accumulation and pensions.

Being financially knowledgeable is associated with a higher probability of being able to handle unexpected financial hardships. Many studies have shown that the gap in financial literacy between men and women exists across countries with different financial market development and institutional set ups as well as different social and cultural contexts. It is found to be independent of a country’s income level.

Low financial knowledge has substantial consequences because it is linked to several other financial decisions. Financial literates are more likely to invest in stock markets, to pay attention to fees, to borrow at low costs, to accumulate retirement wealth, and to diversify risk.

According to OECD study 33% of adults in the world are financially literate- 77% are not. Men have a better understanding of basic financial concepts than women. This figure is 35%(men) vs 30% (women).

Women are less confident in their financial knowledge compared to men. Men are more confidence since finance has been historically linked to men.

This study shows that western European countries have very large gender gaps in financial literacy. The gap ranges from 3% in Croatia and Russia to more than 20% in the Netherlands. Interestingly, the gap is generally higher in more developed countries (e.g. Canada, Germany, the Netherlands, and the U.K.). On the other hand, in the formerly communist countries (Croatia, Hungary, and Russia), the gaps in financial literacy are rather small. The more equal financial literacy scores in those countries may be related to social and economic norms left over from times of communism, when women were expected to be active participants in economic life and decision- making.

When women are taking financial decisions for the household, financial literacy becomes important. The positive side this gap is that women recognise their lack of knowledge in financial matter; hence, education programmes seem very successful.

This research report cited other reports that financial literacy can be improved by the following:

· Making personal finance a required course at colleges and universities

· Employer-provided financial education via seminars to talk about retirement, wealth accumulation and bolster financial security at retirement

· Target women separately from men’s needs and offer programs that recognise the differences between women and men in terms of financial knowledge, financial behaviour, and financial needs.

Financial inclusion without financial education is very risky. It is now more than ever very easy to get a loan using apps etc. We need to make sure people know how to use the financial instruments we are giving them. Financial literacy is about education and confidence. It is not just about maths but how we are able to find information.

I will be running a webinar on the four fundamental concepts to start working on your financial literacy. Do stay tuned and click on the links to subscribe to our newsletter, and join our LinkedIn and Facebook communities.

Photo:“no copyright infringement is intended”