It’s hard work playing catch-up

Women are increasingly taking control of their finances, resisting stereotypes that can begin in childhood with pocket money

The fact that girls earn 15% less pocket money than boys says a lot. We may think that gender stereotypes are changing, but it isn’t happening as fast as we may believe.

Boys earn an average of $12.59 a week compared to $10.98 for girls, according to a survey of more than 2000 parents with at least one child aged eight to 17 conducted last year by the market researcher YouGov.

Girls’ self-perception and confidence around money are moulded by a number of influences. Parents are a trusted source of financial education.

But the difference in pocket money indicates that some parents are treating girls differently from boys. Whether it comes from mothers or fathers, it is time to watch the language and treatment of girls.

For example, never say to your daughters that you are no good with money, as it can set them up to follow your example. It isn’t a time to tell girls that the men in their lives will look after the money. Nor is it appropriate to tell them they are princesses, implying that there is a prince to look after them.

Gender gap widens

Girls battle a barrage of stereotypes on social media – often from dubious influencers – as well as advertising. At the same time, the financial world is more sophisticated and dangerous, with an out-of-control number of scams.

There is an odd disconnect between how women are participating in the workforce and gaining tertiary qualifications at a greater rate than ever before, but their financial literacy and confidence are still alarmingly poor.

What’s more, it is slipping, according to the latest Household, Income and Labour Dynamics (HILDA) survey of about 17,000 Australians.

When asked five basic questions about money, the average correct score of males fell from 4.1 in 2016 to four in the 2020 survey. But the mean score of women – already lagging well behind men – tumbled even further from 3.7 to 3.5.

HILDA surveyed teenage girls and boys and experts observed that the wide financial literacy gap in genders evident in early life persists in later life.

Financial planner Marisa Broome, principal of Wealth Advice, says the low level of financial literacy is “astounding given the amazing superannuation system we have, which, if engaged with, would automatically improve financial literacy”.

Overall, women have a lower appetite for financial risk than men. While 55% of men have an appetite for risk, only 35% of women do, according to a report by Fidelity International, carried out by CoreData.

Divorce takes its toll

Broome says many women, especially in older generations, left the financial decisions to their male partners. Trusting men with the finances can expose women to men’s financial woes, particularly what is called sexually transmitted debt. A rising divorce rate hurts women who have relied on men to manage the family money.

But this is changing, with a third of women keeping their finances separate, while 40% own some joint assets and keep some separate, according to Fidelity.

Younger women have more confidence about financial literacy than women aged over 45, says Kate Farrar, CEO of Brighter Super, a fund with around 260,000 members. It has surveyed members aged over 45 and found that women’s confidence is significantly lower than men’s. There is help for women of all ages to turn around their understanding of money. There are fee-charging courses, but there are also free ones from trusted sources, ranging from governments to not-for-profit superannuation funds.

Broome recommends women start with the Moneysmart website (moneysmart.gov.au) run

by the Australian Securities and Investments Commission. It has good explanations of essential issues such as savings, compound interest, loan repayments, super and retirement.

Some industry super funds with a large female membership run free educational programs for members and even non-members. Rest, for example, has a million female members and has a Women and Super learning centre that covers budgeting and financial planning

Lack of confidence

According to Jo Kowalczyk, CEO of the advocacy group Women in Super, industry superannuation funds are leading the way. “The level of on-demand resources, webinars and interactive tools has grown exponentially,” she says. “And the fact that you can plug in your own details for that, to be tailored to your circumstances, is fantastic.”

Brighter Super, for example, offers targeted seminars, stories and webinars to women who need to go back to the beginning when it comes to money and superannuation to explain the basics.

“Because what we’re finding is that this is a transitional generation, that the highest growth in poverty is among older women who are divorced, who did not plan for independence, superannuation or retirement,” says Farrar. “They have found they are no longer being cared for by their husbands and are therefore not ready.”

Understanding risk is important. Women typically are more cautious, and being invested in a superannuation fund’s default fund takes care of the investment decisions and risk levels for them.

But rather than staying invested in the default fund, Brighter Super found that when there is significant market volatility, older women switch to more conservative investments.

“Women go straight to cash and they miss out on bounces,” says Farrar. “If there’s a significant downturn, they don’t have the confidence or the knowledge to work out when they should get back in and that they should get back in, and it does result in substantially lower balances in retirement.”

Broome says she loves working with women. “To be honest, many of them may not have optimised their financial position, mostly they are acutely aware they need to and are very eager students who are happy to ask all the questions and absorb as much as possible, including the options they have in front of them. They are also willing to make sacrifices now to ensure security later in retirement.”