Women and finances: Growing older makes women better with money

A study by Joanne W. Hsu, an economist at the Federal Reserve Board, proves that women become more financially literate with age. The study revealed that as women approach widowhood, they have a stronger incentive to gain financial literacy; thereby, making them smarter with money.  When I contacted Hsu to ask if she was surprised by the results of her study, she told me, “In the course of my research, I was initially surprised to find that the gender gap in financial literacy can be explained as a result of perfectly rational behavior.  However, in light of the incentives faced by women, I don't think I should have been surprised at all!”

Why are the results of this study important?

Being comfortable managing finances has become increasingly important as an increasing number of women outlive their husbands and are forced to become their own CFOs. The study shows that one spouse, typically the man, will handle the finances in a marriage because his wife may not enjoy managing the household finances, she may not have as much knowledge about finances, or it is a simple division of labor. Maybe that is why I was stuck with the dishes, cleaning, and kids, while he got the checkbook. I divided incorrectly. No matter what the reason may be to explain why more men than women manage household finances, the fact remains that women outlive men, and at some point, must assume the financial responsibility for the home.

Women need to be financially literate

Having a higher level of financial literacy translates into making better investment decisions, managing health-care costs better, increased savings, better debt management, and better retirement planning. As the responsibility of planning for retirement has shifted to individuals managing their own retirement portfolios, rather than relying on company pensions and Social Security, having a higher level of financial literacy has become increasingly more vital for women.

The study revealed...

According to Hsu, "Because the benefits of financial knowledge for women are not realized until she is a widow, the theoretical model predicts that a woman has an incentive to delay the acquisition of financial knowledge until later in life." The majority of study participants said household financial management is typically the husband's role, but as a woman ages, she has a greater incentive to learn financial management tools in order to survive widowhood. Based on the study data, Hsu found that approximately 80 percent of the women who participated would match their husband's financial literacy before widowhood.


Several online resources are designed to help women become more financially literate.

  • LearnVest is a money management website for women. It has a variety of tools including a Bootcamp to help with specific money problems or life stages.
  • Mint - Mint is a personal money management website that keeps your finances all under one roof.
  • Suze Orman - Advice, news, and information about finances and money management designed for women.
  • WIFE (Women's Institute for Financial Education) - A non-profit organization developed to educate women about finances.
  • MyMoney.gov - MyMoney has a special section designed specifically for women to help educate more women on various financial matters.

Now, can we find a study that proves women get better at EVERYTHING with age?

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