Women aren’t as confident as men when it comes to their finances. The most recent financial wellbeing survey from the Money and Pensions Service (MaPS) found 48% of women feel unsure about managing their money, compared to 42% of men. Similarly, 54% of women lack confidence when it comes to making decisions about financial products and services, compared to 47% of men. This confidence gap has widened since the previous survey conducted in 2018, with the most pronounced difference among younger people.
Women fare particularly badly in comparison to men when it comes to their knowledge around retirement planning. Well over half (59%) say they don’t understand enough about pensions to make decisions about saving for retirement, compared to 43% of men. And 60% of women admit they don’t have a plan for their finances in retirement. For men, it’s 44%.
Even so, it could be argued that the gender divide in financial literacy isn’t that extreme – a few percentage points here and there. So why does it matter if women are lagging slightly behind? Well, the fact is that women face a multitude of additional monetary challenges that may be exacerbated by low financial literacy. In fact, MaPS’ survey found women fare worse than men on almost all key financial wellbeing measures.
Fewer women than men are in full-time employment (35% vs 54%), and this widens significantly among single parents (38% of single mums vs 78% of single dads). Women also tend to have lower personal incomes than men. Some 62% of women have incomes of less than £17,500 a year. For men, this figure falls to 42%. Meanwhile, there are double the proportion of men compared to women on incomes over £35,000 a year (25% vs 11%). Tellingly, only 32% of women describe themselves as the chief income earner in their household, compared to 71% of men. According to PwC, the gender pay gap in the UK is currently 11.2%. And their lower personal incomes mean women are at greater financial risk than men from significant life events such as illness or loss of employment, as they have less in savings. Nearly one in five (18%) have no savings at all, compared to 13% of men. And 46% have less than £1,000 put away, compared to 38% of men.
There’s a similar picture when it comes to retirement savings. Where pensions are concerned, women are more likely than men to have multiple low-paid jobs that fall below the threshold for automatic enrolment. Indeed, data from the Department for Work and Pensions shows that between 2020 and 2022, the gap in pension savings between men and women aged 55 – 59 was 48%, with men having an average of £156,000 saved, compared to £81,000 for women.
All of these statistics highlight that women are generally dealing with tighter margins. Couple this with lower levels of financial literacy, and it can spell serious trouble. For example, paying over the odds for goods and services due to low levels of financial literacy may be all it takes to push economically vulnerable women into the red. Indeed, the MaPS survey found women have more difficulty keeping up with bills and credit commitments, especially in the over-55 age group. They’re also more likely to struggle with unexpected expenses. Over a quarter (27%) said they wouldn’t be able to lay their hands on £300 without borrowing, compared to 21% of men. Single mothers were particularly hard-pressed in this respect.
When women are already at a financial disadvantage, it’s crucial they’re not disadvantaged further by low levels of financial literacy. A survey of people we’ve supported with debt advice found 94% didn’t get any financial education when they were younger. Significantly, 80% felt having done so would have helped prevent them from getting into financial difficulty.
Financial literacy gives people the knowledge and tools to recognise when things are going wrong and to take action before they reach breaking point. It helps them avoid high-cost credit, understand what support they’re entitled to and feel more confident in managing their day-to-day expenses. Embedding it into every stage of the educational system is one of the most powerful tools we can give women to help build monetary resilience. This would be a relatively easy win, while the UK continues to address the structural gender inequalities in wider society that persist in challenging the economic wellbeing of women.
By Sebrina McCullough, director of external relations, Money Wellness
About the author
Sebrina McCullough is director of external relations at Money Wellness, a UK provider of free debt advice and money support commissioned by MaPS.
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