Retirement Life
9 December 2020

Help close the financial knowledge gender gap

We need to encourage women to care more about money from a young age to help close a gender gap in financial knowledge, says New Zealand’s Retirement Commissioner Jane Wrightson.

The follows a recent survey by the Commission for Financial Capability (CFFC) which found women tend to have lower financial knowledge than men, and it only gets worse with age.

While Kiwis had a good understanding of concepts like inflation, interest and risk and return, they struggled with the likes of the time value of money – important for retirement savings as it relates to growing money over time. Kiwis also struggled with concepts like compound interest and risk diversification.

Only half as many women as men answered all the questions correctly. Men and women start with the same score in the youngest age group (18-34), but men increase their financial knowledge from the 34 – 54 bracket onwards and women don’t catch up. However, only 22 percent of respondents over all (male and female), got all the questions right.

“Many women have a disconnect between not valuing money per se, and appreciating what money can achieve for them,” says Wrightson.

“They rate making money lower than caring for others, yet it is money that will enable them to look after their children and wider whānau.”

The research found that women who have children tend to have lower financial knowledge than those without, and single women with no children have a higher knowledge than those in a relationship.

It's not all bad

Ironically, Wrightson says women are, on average, better than men at managing money in the short term and tend to be more successful when they do invest.

Authorised Financial Adviser Liz Koh was surprised by the report’s findings, saying they didn’t necessarily fit with her experience over 20 years as a financial planner.

New Zealand's Retirement Commissioner, Jane Wrightson

New Zealand's Retirement Commissioner, Jane Wrightson



“From my observations, women understand the right things to do and are usually more likely to ask for help to fill in their knowledge gaps than men.”

She believed the survey may have better measured people’s ability to perform calculations in their head rather than their understanding of financial concepts.

However, Koh says it is extremely important women take responsibility for their own financial futures.

“Most women experience periods in their life when they are on their own, whether that be through being single, divorced or widowed. On average, women outlive men by around five years, so it is likely that in the last stage of life they will need to look after their own financial affairs,” she says.

“Being financially literate and having good money management skills will help women avoid financial stress and reduce the risk of being reliant on others who may not act in their best interests.”

Wrightson says New Zealand’s results are consistent with other OECD surveys, with the questions were drawn from an OECD toolkit for measuring financial knowledge.

What can we do about this?

“All of us can help the young women in our lives by showing them that knowing how to make money work for you is an essential life skill. It will help them become independent, achieve their life goals and take care of those they love,” Wrightson says.

The CFFC has already begun a Sorted in Schools programme.

“This is helping to normalise financial education and making it a positive thing for girls and boys to be good with money,” she says.

It is also launching a Sorted Women course, taught by women and for women in workplaces and the community. In the meantime, provides resources for lifelong learning that women can access online at any time or age.