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  • Financial literacyWomen understanding money


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  • Financial literacyWomen understanding money

    Commonwealth of Australia 2008

    ISBN: 978 1 74207 648 5

    This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Attorney Generals Department, Robert Garran Offices, National Circuit, Barton ACT 2600 or posted at

  • ii.


    ForeWord iv

    From the chairman v

    executive Summary 1



    chapter 1: introduction 8

    The SuRvey IN CONTexT 8

    SuRvey AND RepORT OveRvIew 9

    chapter 2: hoW Women manage money 10

    BuDGeTING 10

    SAvING 12

    INveSTING 14

    CReDIT AND DeBT 16

    plANNING AND ReTIRemeNT 18

    pROTeCTING mONey 20


    CONCluSION 25

  • iii.Financial literacy Women understanding money

    chapter 3: What Women think about money 27



    leARNING 30

    CONFIDeNCe 31


    CONCluSION 54


    appendix 2: FindingS 61

    appendix 3: Survey methodoLogy 70

    appendix 4: FinanciaL Literacy Foundation 74

  • iv.

    FOrEwOrdThe Australian Government recognises the importance of creating opportunities for all Australians to learn more about money and in this regard I am pleased to introduce the Financial literacy Foundations Financial literacy Women understanding money report.

    This report builds on the findings of the Financial literacy Australians understanding money report, which examines the attitudes and behaviours of all Australians when it comes to using and managing money, by examining the findings for women in greater detail.

    women have more choices about how they manage their money than ever before. There are credit cards, mobile phones, internet banking, and a range of investment options. women are often the ones making day-to-day spending decisions, as well as important decisions about their financial future.

    In this context I am pleased to support the recommendation of the house of Representatives Standing Committee on economics, Finance and public Administrations report on Improving the superannuation savings of people under 40, that the Foundation, in association with the Office for women, respond to the financial literacy needs of women with respect to superannuation.

    The Foundation and the Office for women have created Women Understanding Money, a financial literacy resource for women of all ages that discusses financial issues of personal interest to women and frames superannuation in the context of broader money management issues. It consists of a series of 14 information sheets and is freely available in print and electronic form either by contacting the Foundation or visiting the Foundations website It will also be available through a range of other government, industry and community sector sources.

    This report represents an important complement to the Women Understanding Money resource. It contains valuable insights for those involved in the development and delivery of financial literacy resources and services for women. It presents womens views about the money management issues where they are interested in learning more. Investing, planning for the future and retirement feature prominently amongst these. It also provides valuable information about the way women prefer to learn and measures the extent to which certain attitudes can stop women from learning. Again, these attitudes have a significant impact on the way women manage their money when it comes to planning and retirement.

    I commend the report to you.

    Senator the hon nick Sherry minister for Superannuation and Corporate law

    April 2008

  • v.Financial literacy Women understanding money

    FrOm ThE ChairmaNwelcome to the second of the Financial literacy Foundations reports on Australians and money.

    The first report, Financial literacy Australians understanding money, takes a detailed look at Australians and their money: how we manage it and what we think about it, as well as what we need to learn and what stops us from learning. This report, Financial literacy Women understanding money, takes a closer look at the findings for women.

    There are some basic facts about women and money that are well recognised: lower average incomes, broken work patterns usually for family reasons lower participation rates when it comes to superannuation and in the end, less superannuation. Not only that, womens savings need to go further because they live longer. Theres absolutely no doubt that these are big issues for many women and their families, and theyre important to keep in mind in any discussion about women and money.

    Some of the findings of this research will also sound familiar: women tend to be less confident in their ability to manage money, less comfortable with their financial situation and more conservative in their approaches to managing money. But theres a lot more to it than that.

    If you take a closer look at the findings, youll see some inconsistencies that indicate that both women and men tend to overestimate their ability to manage money well. Confidence can be a great thing in life, but too much of it can get in the way of learning and in this case, learning to manage money better. The interesting thing is that, relative to their ability, women are generally more likely to want to learn about managing money better. when it comes to taking charge of your money, theres no better place to start than wanting to learn.

    This report tells us that many women already have the budgeting and saving habits that are essential to putting yourself in charge of your money. when it comes to investing, planning for the future and retirement all the things that allow you to take control of your money in the longer term women are less confident in their ability. The important thing is that women want to learn more about these issues.

    To make the most of this desire to learn, we need to respond to what women say they are looking for when it comes to managing money better information that meets their needs, responds to their concerns and comes from the sources they prefer. This report is an incredibly rich source of information for anyone working with women to achieve their financial goals and I encourage you to make use of it.

    paul clitheroe Chairman, Financial literacy Foundation Advisory Board

    April 2008

  • vi.

  • 1.Financial literacy Women understanding money

    ExECuTivE SummaryFinancial markets have developed substantially in the context of long-term reforms directed at increasing market efficiency and consumer choice, with consequential benefits for individuals and the wider economy. Financial literacy initiatives are directed at providing Australians with the knowledge and skills to take advantage of the increased opportunities and choices offered by more sophisticated financial markets. In the context of an ageing population, successive initiatives by government have also resulted in a substantial flow of consumer savings to superannuation, further underlining the importance of consumers having the capacity and the confidence to make informed financial decisions.

    more competent, confident and engaged consumers of financial services offer the prospect of improved household savings performance, reduced dependence on Government allowances, and lower levels of problem debt.1 more broadly, they can drive competition and market efficiency, reduce costs for business and create the potential for reduced regulatory intervention.2

    For these benefits to be achievable, consumers need to have the ability to make informed judgements and to take effective decisions regarding the use and management of money. 3 The wide range of consumers individual abilities and understanding, attitudes and behaviour, and needs and preferences, further extends the challenge of providing consumers with the motivation, knowledge and skills to make informed choices in engaging with financial services markets.

    The scope of the task for governments and other financial literacy service providers is broader and more challenging than simply providing comprehensive and well-intentioned education resources. There is no shortage of quality resources available to consumers with an active interest in building their money skills. The challenge is to promote engagement and motivation for those who, either through lack of exposure to learning opportunities or lack of engagement with existing information and resources, are not seeking to build their money skills.

    The findings of the Financial literacy Australians understanding money report, a summary of which is at appendix 1, made a significant contribution to our understanding of Australians attitudes and behaviours when it comes to using and managing money, as well as the attitudes that stop people from engaging with money issues. This report builds on those findings, by examining the findings for women in greater detail and comparing them with the findings for men. The findings relate to respondents self-assessed ability, understanding, attitudes and behaviour in using and managing money, complementing the findings from other Australian surveys that aimed to provide an objective measure of competency in financial matters.

    1 The September 2007 report on Home loan lending by the house of Representatives Standing Committee on economics, Finance and public

    Administration concluded that the work of the Financial literacy Foundation was important to improving financial literacy so that consumers

    understand the implications of their decisions when taking on excessive debt, pp. 29-31.

    2 Financially educated consumers help increasingly complex financial markets to operate efficiently. By their greater ability to compare risk-return

    characteristics of different financial products offered by various intermediaries (as well as differing costs involved), financially literate consumers

    enhance competition. In addition, by demanding products more responsive to their needs, they also encourage providers to develop new products

    and services, thus increasing competition in financial markets, innovation and improvement in quality. OeCD, Improving financial literacy: analysis

    of issues and policies, p. 35.

    3 S Schagen and A lines, Financial Literacy in Adult Life, National Foundation for educational Research, Slough, united Kingdom, 1996, p. ii.

  • 2.

    FindingS at a gLance

    how women manage money

    Budgetingwomen are highly confident in their ability to budget, but around a half say that they dont budget regularly. while women report better budgeting habits than men, they are less likely to think theyd get by in a financial emergency.

    91% of women say they have the ability to budget (men 90%) 80% say they think about ways to reduce their spending (men 78%) 44% say they do not budget regularly for their day-to-day finances (men 52%) 77% say they could get by for some time in case of a financial emergency (men 82%)

    Savingwomen are highly confident in their ability to save and the majority of women say they have good savings habits, but one in five say they dont save. women and men report similar attitudes and behaviours when it comes to saving but women are more likely to say they save before they spend.

    88% of women say they have the ability to save (men 88%) 22% say they dont save (men 21%) 62% say that they save regularly (men 63%) 52% say they save first and spend second (men 48%) 42% say they spend first and save second (men 44%)

    InvestingCompared to budgeting and saving, fewer women are confident in their ability to invest, but the majority are interested in learning more. women are also less confident than men when it comes to investing, and are less likely to take factors such as risk and return into consideration when making an investment decision.

    63% of women say they have the ability to invest money (men 75%) 64% say they own or are currently paying off the home they live in (men 60%) 16% say they have an investment property and 43% say they have other investments (men 20% and 49% respectively) 30% would consider both risk and return when choosing an investment (men 38%) 68% are interested in learning more about investing money (men 71%)

    Credit and debtwomen are highly confident in their ability to deal with credit cards and manage debt. most women say they can manage debt, but some say they only make minimum repayments on credit card debt and loans and that they get into debt by buying things they cant afford. women are less likely than men to say that they have credit cards and loans and more likely to have other sources of debt. women are also less likely to feel comfortable with their level of debt.

    83% feel confident with credit cards and 88% of women say they can manage debt (men 84% and 90% respectively) 74% say that they regularly pay the total balance owing on their credit card when it is due (men 79%) 18% usually only make the minimum repayment on loans and 14% do the same with credit cards (men 16% and 13% respectively) 21% say they will use debt to buy things they cant afford (men 22%) 71% say they have a credit card, 55% say they have loans and 23% say they have other debt (men 73%, 57% and 21% respectively) 18% of women say they are uncomfortable with their level of debt (men 15%)

  • 3.Financial literacy Women understanding money

    Planning and retirementCompared to budgeting, saving, dealing with credit cards and managing debt, women are less confident in their ability to plan for their long-term financial future and ensure enough money for retirement. women are also less confident than men when it comes to planning for their long-term financial future and ensuring enough money for retirement, but they are interested in learning more about planning for their financial future, including in retirement.

    77% of women say they have the ability to plan for their long-term future (men 84%) 60% say they have the ability to ensure enough money for retirement (men 65%) 78% say they have a superannuation fund (men 84%) 12% say employer funded superannuation will meet their retirement needs (men 16%) 74% say they have personally thought about long-term financial plans for the future and retirement (men 78%) 78% are interested in learning more about planning for their long-term financial future and 72% are interested in learning more about ensuring enough money for retirement (men 77% and 70% respectively)

    Protecting moneywomen are highly confident in their ability to protect their money, including through choosing appropriate insurance, understanding rights and responsibilities when dealing with money, and recognising a scam. however, fewer women are con...