India is widely acknowledged as the world’s fastest-growing economy. However, the most significant question raised by the current situation is whether women in the contemporary world have enough ability to make financial decisions about themselves and their families. Women face greater challenges than men when it comes to securing and managing financial well-being in later life. Because women report having less financial literacy than men, many people believe that financial education is vital to narrowing the wealth disparity between men and women. Women consistently outperform men on financial literacy tests, even among younger generations. The basic reason by which this happens is elusive.

The dream is to empower ourselves with education, and then it is a weapon.

Is it true that women in the finance sector know less than men? Is it actually a lack of expertise, or do they delegate responsibility for big financial decisions to someone else? Is it possible that women lack motivation, prompting their success on financial education tests to indicate ambiguity or doubt rather than competence or ability? Knowing the responses to these questions will shed light on the variables that contribute to gender economic inequalities.

As we live longer, this will help in the implementation of efficient, scalable interventions that improve financial stability for all Indians. While women have made remarkable progress in many areas that contribute to long-term financial health over the last century, especially in higher education and workforce engagement, they tend to lag in one key area: financial literacy, which is universally viewed as an essential skill for accumulating wealth.

In a majority of instances, as per Stanford University findings, women do worse in the financial literacy tests than men. They tend to get more questions wrong (Figure 1), and they are more likely to choose that they “don’t know” an answer.

Figure 1. Women tend to score lower than men on tests of financial literacy.

We might predict generational gaps in financial literacy due to the advances made by women over the past century, with younger, single, college-educated women performing more similarly to men. Surprisingly, regardless of age, education level, or marital status, the gender imbalance in financial literacy persists. In the hopes of narrowing this knowledge gap, researchers have developed interventions aimed at increasing financial knowledge, but these have not resulted in significant changes in long-term financial security.

Figure 2. Confidence of Women in making financial decisions.
Figure 3. Percentage of women’s “don’t know responses.”

Paytm, a payments website, published advertising ahead of International Women’s Day highlighting the lack of women in financial literacy. Participants are asked to take a step forward with every ‘yes’ and a step back for every ‘no’ at the start of the commercial. The conclusion demonstrates that the front line is entirely comprised of men, without any women present. The women participants appear distraught and, without acknowledging it, venture into how this setback arose. According to one male participant, women are effectively barred from learning about money.

Paytm presents “The Divide” | A Social Experiment

Now, we’ll look at why financial proficiency is vital for women’s economic and financial empowerment. Financial proficiency is specifically based on the potential for digital financial services to link women to markets, raise incomes, alleviate poverty, and enable women to have significant influence over their earnings and investments, both of which are critical elements of women’s economic empowerment.

Financial inclusion may have a profound impact on women. Women who regularly engage in the financial system will better balance risk, smooth spending in the face of shocks, and finance household expenses such as education. A growing body of robust RCTs suggests that interventions to maximize personal savings have a steadily positive impact on women. Access to individual secure (private) savings accounts for women, including those with fewer household decision-making power, will enhance economic resilience and increase control over financial resources. For example: 

  1. Women in households may use financial instruments to make decisions and have more control of resource allocation. According to studies, women’s access to individual private savings accounts not only fosters economic resilience by increasing women’s savings, but it also allows women to make financial decisions, purchase more consumer goods and increases women’s bargaining power in the household. 
  2. Securing and growing personal income is the first step toward a safe and prosperous financial future for women of any generation. If you’ve been in a typical household job and are joining the workforce by choice or by coercion (widowed, divorced, or partner unemployment), or you’ve just graduated from high school and are ready to take on the world, making an income will be your top financial priority. 
  3. Controlling your spending is the next step in developing your finances. The easiest way to do this is to create and follow a budget, commonly known as a spending plan. A budget is a course of action that assists you with allocating your money into five traditional categories: giving, saving and spending, paying bills, paying off loans, and enjoying. Budgeting assists you with understanding where the money comes from and how you want to invest it. 
  4. Women’s financial inclusion will lead to positive results for girls, household nutrition, and the population as a whole. Using mobile money to distribute cash transfers to women improved dietary diversity alternative to traditional cash delivery, and girls living in poor households with female pension recipients had better nutrition than those with only male recipients.

Women have never felt more powerful than they do now. Female CEOs now outnumber male CEOs in the Fortune 500 for the first time. Women are competing for office at an all-time high. More women are venturing into business. Women outnumber men in bachelor’s degree attainment. Working mothers are increasingly the primary or sole earners in their families. The list could go on and on.

Ending the financial literacy gap is critical for women to gain real economic empowerment. Here are some of the primary reasons: 

  1. Women live longer: According to a Centres for Disease Control and Prevention survey, the average male life expectancy is around 76 years, while the average female life expectancy is slightly more than 81 years. As a result, retirement planning is much more important for women. Rising health-care rates, along with long-term care costs rising higher than inflation, would necessitate financial planning for women. 
  2. Women deserve economic equality: Women would be more able to make wise economic choices during their life once they learn how to handle their personal finances. Women would now provide a greater understanding of their business value. Finally, this data will help to close the gender pay gap. 
  3. Women have a right to be represented: Women who are financially literate have the opportunities they need to build their money and contribute it to causes they care for. This involves taking a larger interest in political and social initiatives, as well as the ability to actively support humanitarian causes. By closing the financial literacy gap, women will be able to finance and invest in female entrepreneurs.

Women have begun to recognize their true ability and are excelling in a variety of fields such as politics, space, science, entertainment, writing, and technology. Financial literacy can elevate their social standing, and making financial decisions on their own may give them the confidence to speak out against abuse and sexual violence.

Girls in rural areas are found to be uncertain of standard banking transactions such as cash withdrawals, account transfers, and the use of debit cards. Women who live in cities and have a higher level of education have a higher level of financial literacy and comprehension. It is due to their greater financial independence and exposure. Women are risk-averse and prefer low-risk investments such as fixed deposits, post office schemes, gold, insurance, provident funds, and national saving certificates. Their decisions are often based on what is best for the family. Governments must close the financial literacy and freedom gap between urban and rural women.

Women’s equality and financial literacy should go hand in hand. Increasing your financial literacy will provide you with a clearer career roadmap, it can help you accomplish your life goals more efficiently, or it can do everything. The path to ensuring economic and social inclusion is to invest in women’s financial literacy. For more women to become leaders across the world, it is essential that they have access to a robust and substantive financial education. There are no boundaries on what women can do with greater economic self-sufficiency and empowerment.

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