Women searching for path through financial maze

Faye Singleton said she didn't know anything about the stock market until she retired a couple of years ago and the money from her 401(k) had to be transferred to a broker.

It became even more relevant to her when the economy took a nosedive and she lost about half her savings.

"I don't open my statements every month, but I have begun to peek in them since I heard through the news (that) things are looking up," the Charleston resident said recently.

While the world of finance is no longer inhabited only by men, a recent study by a national financial education firm suggests just how wide the gender gap remains when it comes to financial literacy.

Among the findings: 40 percent of women compared with 73 percent of men said they have a general knowledge of stocks, bonds and mutual funds in a questionnaire about financial planning. When asked if they felt confident their investments were allocated properly, 24 percent of women said "yes" versus 40 percent of men.

"I knew there was a gender gap because we've been doing this (financialeducation) for 10 years, and we knew anecdotally that it was there, but I didn't expect it to be this large," said Liz Davidson, CEO of California-based Financial Finesse, which provides financial education programs for corporations, credit unions and municipalities.

The group's survey involved about 4,000 people across the U.S. "When we ran the numbers, we were pretty shocked," Davidson said.

"... This would have made more sense to me a generation ago, but I feel like we've come so far, so why this large of a gap?"

Anne Brumbaugh, Ph.D., said she also has observed that men typically know more about finances. She's an assistant professor of marketing at the College of Charleston and studies consumer behaviors, including differences in how men and women manage their finances.

She called the fact that women know less about money "a huge problem."

"If you don't know about markets, about your money, about your spouse's money, where it's coming from, where it is going, how it's invested, you can't manage it," Brumbaugh said. "If you are ignorant about the state of your finances, you can't make good spending and saving decisions.

"If you don't know how to diversify your savings, you run the risk of falling prey to a Bernie Madoff or losing your life savings if the company you worked for -- and in which you invested your entire 401(k) -- goes under. As they say, knowledge is power."

'Self-perpetuating'

Brumbaugh thinks the gender gap is a throwback to traditional gender roles that existed through the '50s and '60s, with the man making and managing the money and the woman taking care of the home. It's compounded by the stereotype that women aren't as good as men at math, making women less likely to engage in the math-related tasks of learning about money, finances and economics.

"It becomes a self-perpetuating cycle," she said.

One local facility that's working to spread financial knowledge is the Increasing HOPE (Helping Others Prosper Economically) Financial Training Center in North Charleston. It offers budgeting, saving and investing information to low- and middle-income residents for a small fee.

Dorthea Bernique, the center's executive director, said a whopping 90 percent of her clients are women. Many weren't engaged in finances previously because the men in their lives were taking care of the money, Bernique said. Women come to the center because they "want a sense of security, and having control of the finances is one thing that does that. ... They want to understand what's going on, they want to know that their bills are going to be paid."

The Financial Finesse survey also suggests that women are more reactive than proactive when it comes to finances.

Forty-three percent of the women who called the firm's help line were calling about debt, while far fewer -- 21 percent -- had questions about budgeting and saving.

In contrast, 36 percent of male callers needed help with debt and 34 percent of them wanted to know more about budgeting and saving.

Davidson, who worked in the hedge fund industry before starting Financial Finesse, said certain factors make financial planning more difficult for women.

First, women typically make less money than men. A woman makes 77 cents for every dollar a man makes, according to the U.S. Census Bureau.

Second, women live an average of seven years longer, so when it comes to retirement, they're having to stretch fewer dollars further. The fact that women live longer also means many end up managing the family finances after their husbands die.

Education

Whether or not women understand investing, they still control the dollars. Women spend more than 70 percent of consumer dollars worldwide and will create 70 percent of the global growth in income at the household level over the next five years, according to the Boston Consulting Group, an international marketing group.

Women need to become interested in finances and educate themselves, Brumbaugh said.

There are a number of educational sources for women, including books and magazines.

"The thing is, it's not that hard," Brumbaugh said. "We're not talking theoretical physics here. We're talking about interest rates, diversifying one's portfolio with simple rules, learning what bonds versus stocks and other financial vehicles are, etc.

"When women I know have been forced to learn about their finances, through divorce or death of their husband, they learn and they learn quickly. They do a great job. Some even like it, some don't. Just like men."

Singleton chose to learn more about money by joining an investment club at the Lowcountry Senior Center. She said the club has helped her understand what her broker is saying, how to read her statements and when to buy.

"I think I'm more confident and a little more attuned," Singleton said.

Finances 101

The College of Charleston's Anne Brumbaugh, Ph.D., recommends the following reading materials for women to educate themselves on finances:

'Women & Money: Owning the Power to Control Your Destiny' by Suze Orman.

'On My Own Two Feet: A Modern Girl's Guide to Personal Finance' by Manisha Thakor and Sharon Kedar.

'Kiplinger's Money Smart Women: Everything You Need to Know to Achieve a Lifetime of Financial Security' by Janet Bodnar.

'Smart Women Finish Rich: 9 Steps to Achieving Financial Security and Funding Your Dreams' by David Bach.

Consumer Reports and Money Magazine, which Brumbaugh says discuss important financial issues in a user-friendly way.

More info

To learn about the services offered by the Increasing HOPE Financial Training Center, call 225-4343 or visit increasinghope.org.

To learn more about investment clubs, go to www.betterinvesting.org.

Reach Kristen Hankla at 937-5548 or khankla@postandcourier.com.