Even with women making great strides in workplace parity and achieving greater financial independence, they continue to lag behind men in many key areas of financial planning.

This is the conclusion of “Gender Gap in Financial Literacy for 2012,” a recently released report from Financial Finesse, a leading provider of workplace financial wellness programs.

The gender gap is most pervasive in two areas that are critical to women’s ability to achieve financial security, according to the report:

  1. Basic money management, the foundation of all financial planning. Only 43% of women reported having an emergency fund in place to cover unexpected expenses, compared to 63% of men. Moreover, only 52% of women said they were comfortable with the amount of non-mortgage debt they had, compared to 71% of men.
  2. Investing knowledge and confidence, which is crucial to women’s ability to build their wealth. Only 37% of women said they have taken a risk tolerance assessment and are aware of their conservative, moderate, or aggressive investment strategy, compared to 57% of men. In addition, only 25% of women reported rebalancing their investment accounts to keep their asset allocation plans on track, compared to 49% of men.

The gap was narrowest in two areas that tend to be more proactive in nature: retirement planning, with women showing virtual equality with men in retirement plan participation, and estate planning, an area that Liz Davidson, CEO and founder of Financial Finesse, says taps many of the natural skills women possess.
“Women are generally nurturing in nature, so they naturally tend to do better with long-term planning, which is about securing their family’s future,” she says. “Short-term, more transactional quantitative decisions, such as budgeting or investing, however, are more appealing to men who enjoy the game of it, so to speak.“

The report also identified that the gap between the genders is widening in nearly every area of financial planning, which Davidson says is highly disconcerting.

“Women should actually be the ones spending more time and putting more focus on improving their finances because they face so many more challenges than men in financial planning,” she says.

Research has found that women live about five years longer than men on average, and nine out of 10 women will be solely responsible for their finances at some point in their adult lives due to divorce or death of a spouse, according to the National Center for Women and Retirement Research.

Davidson points out that beyond living longer, women generally earn less throughout their lifetimes than men because they tend to spend more time out of the workforce caring for children, making it difficult to become financially secure. All these factors, combined with lower average Social Security payments and higher health care costs, put them at a distinct disadvantage financially.

The good news, she says, is that women are seeking financial education and information at very high rates – typically about 2 to 1 compared to men – and are taking the education to heart.

“As employers continue to deliver financial education programs that effectively reach women, we should start to see this gap narrowing,” Davidson says. “We need to help women see how important closing this gap is to creating financial security for themselves and their families.”

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