Part one of this study found a great disparity between women and men’s ability to save money. Let’s pick up where we left off.

Financial Literacy

Perhaps a metric of measuring attitudes toward investing is to look at the extent that people gauge their financial literacy. The study found that women overall rate themselves to be less financially literate than men. Similar majorities of both men and women consider themselves to be “somewhat financially literate,” but only 20% of women see themselves as very financially literate, compared to 27% of men.

How much does perception correlate with investment behavior?

For one, the study found that people who earn less money are the most likely to say they are not at all financially literate. However, women in the same income brackets as men on the whole view themselves as less financially literate. 

Likewise, when it comes to investing in retirement, men are more likely to consider themselves financially literate — even those who don’t save any percentage of their paycheck every month.

Even among those saving 11% or more per month, women are significantly less likely to view themselves as financially literate as men.

Men may just be more likely to judge themselves to be more financially literate. In fact, research suggests that men exhibit overconfidence when it comes to investing. In one study on stock investment, men traded 45% more frequently, but women who did invest outperformed men by .94% per year.

Ultimately, this gives credence to the notion that income plays more of a significant role in the savings gap than financial literacy.

In terms of how people learn financial literacy skills, the study uncovered a few noticeable differences between men and women. Women are more likely to have learned financial literacy from family and friends; men are more likely to have learned skills from books and magazines or other sources. However, ‘family and friends’ was the most popular answer among both genders.

Isolating the results exclusively for women (who learned financial literacy skills) reveals that women who see themselves as very financially literate are more likely to have learned skills in the workplace, books or magazines, online or from other sources, and less likely to have learned skills from family and friends.

Women who rate themselves as very financial literate are also more likely to save 11% or more of their income per month.

Can Young Women Close the Gap?

The good news is that the savings gap tide may already be turning. Since 2015, 401(k) plans as a primary investment are on the rise among women, climbing from 20% in 2015 to 25% today. Savings accounts are declining in popularity. 

In comparison, activity among men has been more static:

Age may have something to do with that. We see a remarkable growth in “combination” investments plans among Millennial women happening, climbing from 24% in 2015 to 34% today. Likewise, savings accounts as primary investment choices dropped by about 38% among this group:

Proportionally, there are fewer 25- to 29-year-olds who have an IRA, pension plan, or other retirement fund compared to older adults. But among those who do, the gender gap is the narrowest: 58% of women and 60% of men. Those percentages contrast significantly with most all older age groups, where the gap is much wider. Just take a look at these two charts:

It’s difficult to say whether or not more Millennials will invest in retirement as they age. Some research suggests that the majority of Millennials fall severely short of basic financial literacy skills. That’s a whole generational issue. 

But when it comes to gender, it’s interesting to see younger women investing in retirement plans at a rate comparable to younger men. More research is needed on what’s fueling this trend. However, that doesn’t account for the percentage of income they are investing. The savings gap is a systemic problem and closing the income gap is one key piece of the puzzle.