Why financial literacy is key to gender equality
I was taught during my primary education that fathers are breadwinners and mothers are housekeepers. Learning these roles at such a tender age formed my views on gender for a long time. I believed that women should be dependent on men, who should make all the money to provide for women. Since I have learned more about feminism, however, my views about gender have changed drastically — in terms of domestic roles as well as financial equality. But I’ve found it especially hard to have healthy conversations about money with other women. The reality is that money is a form of power, and claiming this power is necessary for women to achieve equality.
Financial equality is an undeniably crucial component of achieving gender equality. As such, maintaining financial inequity has long been used as a tactic to maintain women’s marginalization. This takes the form of tying femininity to financial dependency; women have historically been told to look for a “rich” husband who can “provide” for them. On the flip side, men are taught that it’s masculine to talk about and make a lot of money.
This socialization extends to women’s lived experiences in the workplace. Major causes of the gender wage gap, for example, are tied to socially entrenched expectations of women, including disproportionate caring responsibilities of their families, the disproportionate amount of (unpaid) domestic labor they do, and ideas that women can’t lead and therefore can’t rise to higher paying, managerial positions. In fact, research from the Institute for Women’s Policy Research (IWPR) shows that jobs predominantly done by women pay less on average than those predominantly occupied by men.
Then, there’s women’s disproportionate lack of financial education, or knowledge of what to do with the money they do make. According to a 2013 report, only 49 percent of women in the U.K. know how compound interest works compared to 75 percent of men. In Poland, almost 60 percent of women do not know that high investment returns are accompanied by high risk, while 45 percent of men do. And in the United States, 32 percent of women with low financial literacy are likely to engage in problematic credit card behaviors.
The consequences of these social norms are real: Women earn less and save less than men, and live longer than men — an average of 81 years compared to men’s 76.5 years, according to the World Health Organization and Imperial College of London. This means women face additional costs over the cours of their lives, including more long-term and overall health care expenses, but have less money to pay for these costs. Women also face inequities within the financial system. Take basic access to bank accounts: Worldwide, 72 percent of men have access to an account while only 65 percent of women have an account, a gender gap that remains unchanged since 2011. Recent research conducted by the Global Banking Alliance for Women also found that men represent 65 percent of global bank customers, handle 80 percent of loans, and make 75 percent of bank deposits.
In order to strive toward achieving financial equality, women must learn how to better manage their financial resources and, ideally, have access to a range of financial services. For example, the European Bank for Reconstruction and Development reports that they have worked with thousands of successful women in business across 26 countries, leading to increases in accessing external finances to grow their business and improving their productivity. With the right support, EBRD claims, women-led businesses can not only grow, but excel.
Of course, public policies are needed to support and grow women’s ability to use financial services. Governments across the world need to consider introducing laws that do this, like those that fight discrimination that may prohibit someone’s access to credit based on gender or marital status, and those that reform legal barriers to women’s access and control over assets by addressing laws affecting marital property and inheritance. In fact, since 2016, nine countries have introduced compulsory gender quotas for private limited companies and state-owned enterprises. To promote transparency on the gender wage gap, several countries have also implemented measures that require companies to disclose gender divides in their pay.
Iceland has used policies to promote financial equality well: Gender-based pay discrimination has been illegal in Iceland since 1961. When the country realized the gender wage gap was still persisting at 6 percent, Iceland adopted a new law in 2018 that requires companies to demonstrate that their wages are fair. By 2022, any public or private body in Iceland employing more than 25 people that has not been independently certified as paying equal wages for work of equal value will face daily fines.
Being financially independent is not just about money, therefore, but about women’s overall autonomy. Women who have access to bank accounts, savings mechanisms, and other financial services may be better able to control their earnings and undertake personal and productive expenditures. They may have more substantive autonomy over their lives in decisions ranging from employment and marriage to whether to use contraception. They may also have more options to leave abusive relationships and experience reduced exposure to intimate partner violence. As Christine Lagarde, managing director of the International Monetary Fund, once said, “Women often bear the brunt of poverty and limited access to economic opportunity, including unfavorable financial access...Inequality is not just a moral issue—it is a macroeconomic issue.”
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