Financial literacy and wellness among U.S. women: Introduction

COVID-19 and its economic consequences have negatively affected the financial well-being of many Americans. For example, 30% of those employed in October 2019 have experienced a job loss or reduction in work hours since March 2020 (Board of Governors of the Federal Reserve System, 2020). Beyond the aggregate view, however, COVID-19 will exacerbate pre-existing gaps in financial well-being among U.S. adults to the extent that different demographic groups are disproportionately impacted. Women are at risk in this sense.

Prior to COVID-19, women were already facing greater economic challenges than men. Data from the 2018 National Financial Capability Study (FINRA, 2019) highlight this reality along various dimensions, such as:

  • Difficulty making ends meet.

  • Lack of confidence in the ability to achieve financial goals.

  • Trouble covering an unexpected expense.

  • Concern about retirement personal finances.1

Now evidence is emerging that the COVID-19 pandemic has financially impacted women more so than men. While women comprised 46% of the workforce prior to COVID-19, they account for 54% of overall job losses (McKinsey Global Institute, 2020). The norm division of household responsibilities has also imposed a greater impact on women’s work availability as schools switched to at-home, online instruction for most of the spring and in many cases the fall semester. A July survey by the Federal Reserve found that 23% of working mothers expected to reduce their hours of work if schools did not have in-person classes during the fall and an additional 4% expected to stop working completely. The analogous figures among working fathers were 15% and 2%, respectively (Board of Governors of the Federal Reserve System, 2020).2

An ability to manage personal finances in periods of financial uncertainty and challenges depends, at least in part, on financial literacy. Financial literacy is knowledge and understanding that enable sound financial decision making and effective management of personal finances. In times that are anything but normal, such as the current pandemic environment and its severe economic consequences, the ability to make appropriate financial decisions matters greatly.

This report uses data from the 2020 TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) to examine the state of financial literacy and financial wellness among U.S. women immediately before the onset of COVID-19. A more refined understanding of financial literacy among women, including areas of strength and weakness and variations among subgroups such as underrepresented minority women, can inform initiatives to improve financial wellness, particularly as the United States moves forward from the pandemic. While not a cure-all, increased financial literacy can lead to improved financial capability and practices that benefit even those with relatively modest resources.

The P-Fin Index is unique in its capacity to examine financial literacy across eight areas of personal finance in which individuals routinely function, in addition to providing a robust indicator of overall personal finance knowledge and understanding.3 The online survey is fielded each January with a sample of U.S. adults; the 2020 sample consisted of 1,008 individuals.4 At the same time, the survey is also fielded with a separate oversample of a particular demographic group to enable detailed analysis of that group; 1,000 women were oversampled in 2020.5,6 Previous oversamples were Hispanics in 2017, millennials in 2018, and African Americans in 2019.

1 Women are less likely to have a retirement account and less likely to have tried to determine how much they need to save.

2 Alon et al. (2020) provide analogous arguments that occupational and childcare factors will result in a disproportionate negative effect from COVID-19 on women and their employment opportunities.

3 See Yakoboski, Lusardi and Hasler (2020) for a full discussion of the P-Fin Index and the 2020 findings for the U.S. adult population.

4 The sample was drawn from Ipsos’ KnowledgePanel, which is a large-scale probability-based online education level, household income and language proficiency to be nationally representative of U.S.panel. The sample was weighted by gender, age, race and ethnicity, census region, metropolitan status, adults, ages 18 and older.

5 There is no overlap between members of the general population sample and the oversample; the 525women in the general population sample were not included among the 1,000 members of the women’s oversample.

6 The women’s oversample too was weighted by age, census region, metropolitan status, education level, and household income to be nationally representative.

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