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Financial literacyWomen understanding money

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Financial literacyWomen understanding money

© Commonwealth of Australia 2008

ISBN: 978 1 74207 648 5

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Attorney General’s Department, Robert Garran Offices, National Circuit, Barton ACT 2600 or posted at http://www.ag.gov.au/cca.

ii.

CONTENTS

ForeWord iv

From the chairman v

executive Summary 1

FINDINGS AT A GlANCe 2

SOme OBSeRvATIONS 5

chapter 1: introduction 8

The SuRvey IN CONTexT 8

SuRvey AND RepORT OveRvIew 9

chapter 2: hoW Women manage money 10

BuDGeTING 10

SAvING 12

INveSTING 14

CReDIT AND DeBT 16

plANNING AND ReTIRemeNT 18

pROTeCTING mONey 20

INFORmATION AND ADvICe 22

CONCluSION 25

iii.Financial literacy Women understanding money

chapter 3: What Women think about money 27

INTRODuCTION 27

ABIlITy AND uNDeRSTANDING 28

leARNING 30

CONFIDeNCe 31

ATTITuDeS AND BehAvIOuRS 34

CONCluSION 54

appendix 1: FINANCIAL LITERACY – AUSTRALIANS UNDERSTANDING MONEY – Summary oF FindingS 57

appendix 2: FindingS 61

appendix 3: Survey methodoLogy 70

appendix 4: FinanciaL Literacy Foundation 74

iv.

FOrEwOrdThe Australian Government recognises the importance of creating opportunities for all Australians to learn more about money and in this regard I am pleased to introduce the Financial literacy Foundation’s Financial literacy – Women understanding money report.

This report builds on the findings of the Financial literacy – Australians understanding money report, which examines the attitudes and behaviours of all Australians when it comes to using and managing money, by examining the findings for women in greater detail.

women have more choices about how they manage their money than ever before. There are credit cards, mobile phones, internet banking, and a range of investment options. women are often the ones making day-to-day spending decisions, as well as important decisions about their financial future.

In this context I am pleased to support the recommendation of the house of Representatives Standing Committee on economics, Finance and public Administration’s report on Improving the superannuation savings of people under 40, that the Foundation, in association with the Office for women, respond to the financial literacy needs of women with respect to superannuation.

The Foundation and the Office for women have created Women Understanding Money, a financial literacy resource for women of all ages that discusses financial issues of personal interest to women and frames superannuation in the context of broader money management issues. It consists of a series of 14 information sheets and is freely available in print and electronic form either by contacting the Foundation or visiting the Foundation’s website www.understandingmoney.gov.au. It will also be available through a range of other government, industry and community sector sources.

This report represents an important complement to the Women Understanding Money resource. It contains valuable insights for those involved in the development and delivery of financial literacy resources and services for women. It presents women’s views about the money management issues where they are interested in learning more. Investing, planning for the future and retirement feature prominently amongst these. It also provides valuable information about the way women prefer to learn and measures the extent to which certain attitudes can stop women from learning. Again, these attitudes have a significant impact on the way women manage their money when it comes to planning and retirement.

I commend the report to you.

Senator the hon nick Sherry minister for Superannuation and Corporate law

April 2008

v.Financial literacy Women understanding money

FrOm ThE ChairmaNwelcome to the second of the Financial literacy Foundation’s reports on Australians and money.

The first report, Financial literacy – Australians understanding money, takes a detailed look at Australians and their money: how we manage it and what we think about it, as well as what we need to learn and what stops us from learning. This report, Financial literacy – Women understanding money, takes a closer look at the findings for women.

There are some basic facts about women and money that are well recognised: lower average incomes, broken work patterns – usually for family reasons – lower participation rates when it comes to superannuation and in the end, less superannuation. Not only that, women’s savings need to go further because they live longer. There’s absolutely no doubt that these are big issues for many women and their families, and they’re important to keep in mind in any discussion about women and money.

Some of the findings of this research will also sound familiar: women tend to be less confident in their ability to manage money, less comfortable with their financial situation and more conservative in their approaches to managing money. But there’s a lot more to it than that.

If you take a closer look at the findings, you’ll see some inconsistencies that indicate that both women and men tend to overestimate their ability to manage money well. Confidence can be a great thing in life, but too much of it can get in the way of learning and in this case, learning to manage money better. The interesting thing is that, relative to their ability, women are generally more likely to want to learn about managing money better. when it comes to taking charge of your money, there’s no better place to start than wanting to learn.

This report tells us that many women already have the budgeting and saving habits that are essential to putting yourself in charge of your money. when it comes to investing, planning for the future and retirement – all the things that allow you to take control of your money in the longer term – women are less confident in their ability. The important thing is that women want to learn more about these issues.

To make the most of this desire to learn, we need to respond to what women say they are looking for when it comes to managing money better – information that meets their needs, responds to their concerns and comes from the sources they prefer. This report is an incredibly rich source of information for anyone working with women to achieve their financial goals and I encourage you to make use of it.

paul clitheroe Chairman, Financial literacy Foundation Advisory Board

April 2008

1.Financial literacy Women understanding money

ExECuTivE SummaryFinancial markets have developed substantially in the context of long-term reforms directed at increasing market efficiency and consumer choice, with consequential benefits for individuals and the wider economy. Financial literacy initiatives are directed at providing Australians with the knowledge and skills to take advantage of the increased opportunities and choices offered by more sophisticated financial markets. In the context of an ageing population, successive initiatives by government have also resulted in a substantial flow of consumer savings to superannuation, further underlining the importance of consumers having the capacity and the confidence to make informed financial decisions.

more competent, confident and engaged consumers of financial services offer the prospect of improved household savings performance, reduced dependence on Government allowances, and lower levels of problem debt.1 more broadly, they can drive competition and market efficiency, reduce costs for business and create the potential for reduced regulatory intervention.2

For these benefits to be achievable, consumers need to have ‘the ability to make informed judgements and to take effective decisions regarding the use and management of money.’ 3 The wide range of consumers’ individual abilities and understanding, attitudes and behaviour, and needs and preferences, further extends the challenge of providing consumers with the motivation, knowledge and skills to make informed choices in engaging with financial services markets.

The scope of the task for governments and other financial literacy service providers is broader and more challenging than simply providing comprehensive and well-intentioned education resources. There is no shortage of quality resources available to consumers with an active interest in building their money skills. The challenge is to promote engagement and motivation for those who, either through lack of exposure to learning opportunities or lack of engagement with existing information and resources, are not seeking to build their money skills.

The findings of the Financial literacy – Australians understanding money report, a summary of which is at appendix 1, made a significant contribution to our understanding of Australians’ attitudes and behaviours when it comes to using and managing money, as well as the attitudes that stop people from engaging with money issues. This report builds on those findings, by examining the findings for women in greater detail and comparing them with the findings for men. The findings relate to respondents’ self-assessed ability, understanding, attitudes and behaviour in using and managing money, complementing the findings from other Australian surveys that aimed to provide an objective measure of competency in financial matters.

1 The September 2007 report on Home loan lending by the house of Representatives Standing Committee on economics, Finance and public

Administration concluded that the work of the Financial literacy Foundation was important to improving financial literacy so that consumers

understand the implications of their decisions when taking on excessive debt, pp. 29-31.

2 ‘Financially educated consumers help increasingly complex financial markets to operate efficiently. By their greater ability to compare risk-return

characteristics of different financial products offered by various intermediaries (as well as differing costs involved), financially literate consumers

enhance competition. In addition, by demanding products more responsive to their needs, they also encourage providers to develop new products

and services, thus increasing competition in financial markets, innovation and improvement in quality.’ OeCD, Improving financial literacy: analysis

of issues and policies, p. 35.

3 S Schagen and A lines, Financial Literacy in Adult Life, National Foundation for educational Research, Slough, united Kingdom, 1996, p. ii.

2.

FindingS at a gLance

how women manage money

Budgetingwomen are highly confident in their ability to budget, but around a half say that they don’t budget regularly. while women report better budgeting habits than men, they are less likely to think they’d get by in a financial emergency.

91% of women say they have the ability to budget (men 90%) 80% say they think about ways to reduce their spending (men 78%) 44% say they do not budget regularly for their day-to-day finances (men 52%) 77% say they could get by for some time in case of a financial emergency (men 82%)

Savingwomen are highly confident in their ability to save and the majority of women say they have good savings habits, but one in five say they don’t save. women and men report similar attitudes and behaviours when it comes to saving but women are more likely to say they save before they spend.

88% of women say they have the ability to save (men 88%) 22% say they don’t save (men 21%) 62% say that they save regularly (men 63%) 52% say they save first and spend second (men 48%) 42% say they spend first and save second (men 44%)

InvestingCompared to budgeting and saving, fewer women are confident in their ability to invest, but the majority are interested in learning more. women are also less confident than men when it comes to investing, and are less likely to take factors such as risk and return into consideration when making an investment decision.

63% of women say they have the ability to invest money (men 75%) 64% say they own or are currently paying off the home they live in (men 60%) 16% say they have an investment property and 43% say they have other investments (men 20% and 49% respectively) 30% would consider both risk and return when choosing an investment (men 38%) 68% are interested in learning more about investing money (men 71%)

Credit and debtwomen are highly confident in their ability to deal with credit cards and manage debt. most women say they can manage debt, but some say they only make minimum repayments on credit card debt and loans and that they get into debt by buying things they can’t afford. women are less likely than men to say that they have credit cards and loans and more likely to have other sources of debt. women are also less likely to feel comfortable with their level of debt.

83% feel confident with credit cards and 88% of women say they can manage debt (men 84% and 90% respectively) 74% say that they regularly pay the total balance owing on their credit card when it is due (men 79%) 18% usually only make the minimum repayment on loans and 14% do the same with credit cards (men 16% and 13% respectively) 21% say they will use debt to buy things they can’t afford (men 22%) 71% say they have a credit card, 55% say they have loans and 23% say they have other debt (men 73%, 57% and 21% respectively) 18% of women say they are uncomfortable with their level of debt (men 15%)


Planning and retirementCompared to budgeting, saving, dealing with credit cards and managing debt, women are less confident in their ability to plan for their long-term financial future and ensure enough money for retirement. women are also less confident than men when it comes to planning for their long-term financial future and ensuring enough money for retirement, but they are interested in learning more about planning for their financial future, including in retirement.

77% of women say they have the ability to plan for their long-term future (men 84%) 60% say they have the ability to ensure enough money for retirement (men 65%) 78% say they have a superannuation fund (men 84%) 12% say employer funded superannuation will meet their retirement needs (men 16%) 74% say they have personally thought about long-term financial plans for the future and retirement (men 78%) 78% are interested in learning more about planning for their long-term financial future and 72% are interested in learning more about ensuring enough money for retirement (men 77% and 70% respectively)

Protecting moneywomen are highly confident in their ability to protect their money, including through choosing appropriate insurance, understanding rights and responsibilities when dealing with money, and recognising a scam. however, fewer women are confident in their ability to invest and the findings indicate that the majority wouldn’t take key considerations into account when making an investment decision, so they may be more vulnerable to scams than they think. women and men report similar attitudes and behaviour when it comes to protecting money.

81% of women say they have the ability to choose appropriate insurance (men 82%) 85% say they understand their rights and responsibilities when dealing with money (men 86%) 87% say they can recognise a scam or an investment scheme that seems too good to be true (men 89%) 63% of women say they have the ability to invest money (men 75%) 70% would not consider both risk and return when choosing an investment (men 62%)

Information and advicewomen are highly confident in their ability to get information about money with a majority having sought financial information or advice from an accountant/tax agent or a bank, and just over a half from a financial adviser. Fewer women are confident in their ability to understand financial language, consistent with their level of confidence in ability to invest and ensure enough money for retirement, and most are interested in learning more. women and men report similar abilities in obtaining information about money and dealing with financial service providers but there are substantial differences in their preferred sources of information or advice. women are more likely than men to consider getting information and advice from financial advisors, banks, community services and government sources.

84% of women say they have the ability to get information about money (men 85%) 81% say they have the ability to deal with financial service providers (men 82%) 66% say they have used an account/tax agent, and 60% say they have used a bank for financial advice (men 69% and 53% respectively) 60% say they understand financial language and 70% are interested in learning more (men 68% and 66% respectively) 79% say they understand all or most of the information in financial statements (men 80%) 84% say that for financial information and advice they would consider using a financial advisor, 65% a bank, 48% a community service and 33% Centrelink (men 80%, 55%, 36% and 25% respectively)

4.

What women think about money

Ability and understandingwomen are generally highly confident in their ability with money, especially when it comes to everyday money management issues like budgeting, saving, dealing with credit and managing debt. They’re less confident when it comes to more complex issues like investing, understanding financial language and ensuring enough money for retirement, and with these issues they’re also less confident than men.

91% of women say they have the ability to budget (men 90%) 88% of women say they have the ability to save (men 88%) 85% of women say they have the ability to understand their rights and responsibilities when dealing with money (men 86%) 83% of women say they have the ability to deal with credit cards (men 84%) 88% of women say they have the ability to manage debt (men 90%) 77% of women say they have the ability to plan for their long-term financial future (men 84%) 63% of women say they have the ability to invest money (men 75%) 60% of women say they understand financial language (men 68%) 60% of women say they have the ability to ensure enough money for retirement (men 65%)

Recognition of the importance of learningwomen think it’s important to learn more about more complex money management issues such as planning for the financial future, understanding rights and responsibilities when dealing with money and ensuring enough money for retirement. They’re less interested in learning more about everyday money management issues, consistent with their higher levels of confidence in these areas. Recognition of the importance of learning more is generally similar for women and men, but relative to their ability, women are more interested in learning about planning for the future, investing, understanding financial language and ensuring enough money for retirement.

78% of women are interested in learning more about planning for their long-term financial future (men 77%) 74% are interested in learning more about understanding their rights and responsibilities when dealing with money (men 73%) 72% are interested in learning more about ensuring enough money for retirement (men 70%) 70% are interested in learning more about understanding financial language (men 66%) 68% are interested in learning more about investing money (men 71%) 57% are interested in learning more about budgeting (men 57%) 66% are interested in learning more about saving (men 64%) 49% are interested in learning more about dealing with credit cards (men 49%) 61% are interested in learning more about managing debt (men 61%)


Attitudes and beliefsSignificant numbers of women hold attitudes and beliefs that can get in the way of them managing their money better – from thinking it doesn’t matter to finding it stressful, uncomfortable or boring. women are more likely than men to find money stressful, uncomfortable or boring and less likely to feel in control of their financial situation, but they’re less likely to take a short term view or be dismissive of money.

52% say that dealing with money is stressful and overwhelming (men 43%) 42% say that thinking too much about their long-term financial future makes them uncomfortable (men 37%) 34% say dealing with money is boring (men 29%) 23% say nothing I do will make a big difference to my financial situation (men 19%) 29% say financially, they like to live for today (men 34%) 52% of women believe that money is just a means to buy things (men 59%)

6.

Some obServationSA picture of women’s attitudes to money and actual money management behaviour is revealed from the findings of this report. while some parts of the picture are consistent, there are also some apparent inconsistencies. Importantly, all findings give insights into the mix of attitudes, beliefs and behaviours that must be addressed if financial literacy initiatives directed at women are to succeed.

abiLity, underStanding and recognition oF the importance oF Learning more about money management iSSueS

57

49

61

66

68

65

70

72

68

78

74

67

69

91

83

88

88

87

81

84

81

60

60

63

77

85

Ensuring enough money for retirement

Understanding financial language

Investing

Planning for the financial future

Understanding rights and responsibilities

Dealing with financial service providers

Getting information about money

Choosing appropriate insurance

Recognising a scam

Saving

Managing debt

Dealing with credit cards

Budgeting

% of women aged 18 years and older

Importance of learning moreAbility and understanding


In the • Financial literacy – Australians understanding money report, ‘operational’ confidence in dealing with money issues was defined as the gap between self-assessed ability to deal with a particular issue and recognition of the importance of learning. The same measure is used in this report. On this basis, confidence levels for women are higher for less complex or frequently encountered money management issues like budgeting, dealing with credit cards, managing debt and saving, and lower for more complex and less frequently encountered issues such as investing, understanding financial language and ensuring enough money for retirement. The concept of ‘operational’ confidence is discussed further in chapter 3.

while, at the least, a majority of women are confident in their ability in all 13 money management issues, •some do not have good money management habits, particularly in areas where they are relatively less confident in ability, such as investing, but also in areas of high confidence in ability where recognition of the importance of learning is relatively low, such as dealing with credit cards.

The tendency for money behaviour to be at odds with self-assessed ability may be explained in a variety of ways. •An ability to prepare a budget or commit to a regular savings plan doesn’t necessarily lead to budgeting or saving on a regular basis.

procrastination can be a factor. As with most money issues, there may be little or no adverse short term –consequences in someone, for example, recognising that they should put a budget or savings plan in place, having the capacity to do so, but putting it off until later.

For issues where operational confidence is high but significant proportions of women reported behaviour that •could not be said to be financially literate, there may be attitudes at play which impede either awareness of the need to learn, or the progression from awareness to learning and action. For these women, a lack of technical ability does not appear to be the issue so much as the learning and action having a perceived lack of relevance and importance.

The survey reveals a range of money attitudes and beliefs that are inimical to people investing the –time and effort required in taking the steps to improve their money skills and behaviour. As the survey indicates, stress and discomfort, boredom and disinterest, and personal relevance and procrastination, are commonly held attitudes when it comes to money.

For those concerned with delivering financial literacy services and resources to women there is much to be drawn from this report. A key consideration to emerge relates to the practicalities of building pathways to effective engagement with money issues – of putting appropriate emphasis on motivation in design and delivery strategies by promoting the personal relevance of better money management, and the prospect of the greater choices and opportunities, security and other quality of life benefits that better money skills can provide.

There is no shortage of quality resources already available to those with an active interest in building their money skills. The challenge is to promote engagement and motivation to those who, for reasons of disinterest in the issue, lack of perceived relevance, stress or the other obstacles identified in this report, are not currently seeking to build their money skills.

In many ways, the broad observations about women’s money management ability, behaviour and attitudes are similar to those noted for the whole adult population in Financial literacy – Australians understanding money. while there are many similarities between women and men when it comes to managing and thinking about money, there are also some notable differences. These are discussed in chapters 2 and 3, and detailed in appendix 2.

8.

ChapTEr 1: iNTrOduCTiON

the Survey in contextFinancial literacy is an issue of growing public policy significance internationally. In recent years, Organisation for economic Cooperation and Development countries such as the united Kingdom, the united States, Australia and New Zealand have taken decisive action at the government level to provide avenues for consumers to build their money skills, recognising that consumers of financial services, and thus the effective operation of financial services markets, face a range of challenges.

By giving individuals the opportunity to take advantage of increased competition and choice in financial services, financial literacy can yield positive, tangible and lasting results for individuals, families and the broader community. The benefits include greater personal independence, wellbeing and improved economic prosperity. Businesses benefit from improved staff welfare and consequential improvements in productivity. The financial services market will also operate more efficiently when consumers are better informed and more confident in exercising the choices available to them.

The Financial literacy Foundation (the Foundation) aims to assist all Australians to increase their financial knowledge and better manage their money (see appendix 4 for more information on the role of the Foundation). As part of its work, the Foundation commissioned DBm Consultants to survey a total of 7,500 Australians aged 12 to 75 to gain a better understanding of our attitudes to money: how confident we are and how we behave when it comes to managing our money. The sample consisted of 6,947 adults aged 18 to 75 and 553 youths aged 12 to 17 years. In proportion to their natural incidence in the population, the sample included people from non-english speaking backgrounds, Indigenous Australians and Australians living in rural locations. The final sample was weighted for age, gender and geographic distribution by state and territory, using the Australian Bureau of Statistics 2001 census data. See appendix 3 for more information on the survey methodology.

The survey represents a unique contribution to the body of international financial literacy research, as well as to research on financial literacy in Australia. It is designed to complement other Australian surveys that aim to provide an objective measure of competency in financial matters, and to contribute to a broader understanding of financial literacy in Australia by examining respondents’ self-assessed ability, understanding, attitudes and behaviour in regard to using and managing money.


Survey and report overvieWThe Foundation’s research report, Financial literacy – Australians understanding money, identified some significant differences between the behaviour of women and men when it comes to managing and thinking about money (see appendix 1 for a summary of the report’s findings). This report builds on those findings, examining these differences in greater detail and providing a more complete picture of the attitudes and behaviours of women with respect to managing money.

Of the 7,500 people surveyed, 4,138 were women over the age of 18. It is the findings for this group that form the basis of this report. The significant sample size has allowed the data for women to be broken down by both age and household income: a level of detail not included in the earlier report. A consolidated set of the data for women is provided at appendix 2.

This report is similar in structure to that of the Financial literacy – Australians understanding money report. Following this introductory chapter, chapter 2 sets out women’s responses to a series of questions regarding their attitudes to money and money management behaviour across seven money topics and 13 corresponding money management issues.

topic money management issues

Budgeting Budgeting

Saving Saving

Investing Investing

Credit and debt Dealing with credit cardsmanaging debt

planning and retirement planning for the long-term financial futureensuring enough money for retirement

protecting money Choosing appropriate insuranceunderstanding rights and responsibilitiesRecognising a scam

Information and advice understanding financial languageDealing with financial service providersGetting information about money

chapter 3 examines the relationship between women’s self-assessed ability and understanding and other elements of their survey responses, including how they put their money management skills into practice. This chapter also examines survey responses to nine specified attitudes about money and the impact that these have on behaviour.

The report concludes with a series of appendices covering:

a summary of findings from the • Financial literacy – Australians understanding money report (appendix 1);

the survey findings for women, broken down by age and household income ( • appendix 2);

the survey methodology ( • appendix 3); and

information about the Financial literacy Foundation ( • appendix 4).

10.

ChapTEr 2: hOw wOmEN maNagE mONEyIn this Chapter, other than where indicated, differences between the genders have been included in the comparative charts and associated discussion only where they are statistically significant at the 95% confidence level.

budgeting

Women are highly confident in their ability to budget, but around a half say that they don’t budget regularly.

While women report better budgeting habits than men, they are less likely to think they’d get by in a

financial emergency.

Budgeting is a simple activity that helps people to track their income and expenses. The benefits of using a budget to put savings to good use and increase broader money management skills can help people achieve financial goals that have significant and lasting value.

most women are highly confident in their ability to budget (91%), the highest of any issue covered by the survey. Consistent with high reported confidence levels, only around half of all women recognise the importance of learning more about budgeting (57%), the second lowest for the issues covered by the survey.

most women consider that they are easily able to keep track of their everyday spending (82%) and think about ways to reduce spending (80%). In addition, most women say that they could get by for some time in case of a financial emergency (77%), and a majority consider that they would not have problems setting money aside for big purchases or spending (69%).

Despite women’s high levels of confidence in their ability, and generally reporting good budgeting habits, around half report that they do not budget regularly for their day-to-day finances (44%).

budgeting – Women’S attitudeS and behaviour

Able to keep track of spending

Think about ways to reduce spending

Could get by in a financial emergency

Don’t have problems setting money aside for big purchases

Don’t budget regularly

82

80

77

69

44



differences between genderswomen generally report better budgeting habits than men.

women and men report similar levels of ability and understanding with budgeting day-to-day finances, but women are much more likely than men to regularly do a budget for their day-to-day finances and more likely to think about ways to reduce their spending.

Despite this, women feel less comfortable about their financial position than men, with fewer reporting that they could get by for some time in case of a financial emergency.

budgeting – diFFerenceS betWeen genderS

Budgeting - ability

Think about ways to reduce spending

Don’t budget regularly

Could get by in a financial emergency

% of respondents aged 18 years and older

Women Men

91

90

80

78

44

52

77

82

12.

Saving

Women are highly confident in their ability to save and the majority of women say they have good savings

habits, but one in five say they don’t save. Women and men report similar attitudes and behaviours when

it comes to saving but women are more likely to say they save before they spend.

The key to successful saving is to start early, no matter how small the savings. Through successful saving, people are more likely to have an improved ability to cope with unexpected expenses or financial emergencies. They can also experience less stress and uncertainty regarding their ability to meet their financial needs, particularly as they progress towards meeting their financial goals.

most women are highly confident in their ability to save (88%), the second highest of the issues covered by the survey. In addition, the majority of women recognise the importance of learning more about saving (66%).

most women say that they have a special savings account used just for savings (73%), save regularly (62%), and agree that the best way to save money is to save a small amount regularly, starting young (75%).

when it comes to the manner of saving, women are more likely to say they save before they spend (52%), and less likely to spend before they save (42%). however, many women say that they don’t save (22%).

Saving – Women’S attitudeS and behaviour

62

75

52

42

22

73

Don't save

Spend before saving

Save before spending

Agree best way to save is to save regularly, starting young

Save regularly

Have a dedicated savings account



differences between genderswhile the behaviour of women and men is fairly similar when it comes to saving, women are more likely than men to report that they save before they spend and more likely to recognise the importance of learning more about saving.

Saving – diFFerenceS betWeen genderS

Women Men

48

64

66

52

Saving - interest in learning

Save before spending


14.

inveSting

Compared to budgeting and saving, fewer women are confident in their ability to invest, but the majority are

interested in learning more. Women are also less confident than men when it comes to investing, and are less

likely to take factors such as risk and return into consideration when making an investment decision.

Investing means making money work harder, and investments don’t have to be big to be worthwhile. Investing is one way that people can make the most of their savings. For many people, successful investing is the key to security and choice during their working lives and retirement.

Compared to budgeting and saving, fewer women are confident in their ability to invest (63%) – the third lowest reported level of ability. while the majority of women recognise the importance of learning more about investing (68%), this rate is relatively low compared to the reported level of ability.

The majority of women say that they own or are currently paying off the home they live in (64%). Some women own or are currently paying off an investment property (16%), and just under a half say that they have other investments (43%).

A number of findings are consistent with a relative lack of confidence in investing. less than a third of women would consider risk and return when making an investment decision (30%), and few would consider background information such as the reputation of the company (5%) and diversification (5%). however, the majority of women recognise that the risks and returns of an investment are unpredictable (67%).

inveSting – Women’S attitudeS and behaviour

67

30

43

16

64

Agree that risks and returns are unpredictable

Consider risk and return when making an investment

Have other investments

Have investment property

Own or paying off home



differences between gendersCompared to men, women reported that they are less confident in their ability to invest and less likely to engage in investing, outside home ownership.

when it comes to holding investments, women are more likely than men to report that they own or are currently paying off the home they live in. however, women are less likely than men to report that they own or are currently paying off an investment property, and much less likely to have other investments.

women are much less likely than men to say that they would consider risk and return when making an investment decision. however, women are more likely than men to recognise that the risks and returns of an investment are unpredictable.

inveSting – diFFerenceS betWeen genderS

Women Men


49

75

71

38

63

20

6064

16

43

63

68

67

30

Agree that risks and returns are unpredictable

Consider risk and return when making an investment

Investing - interest in learning

Investing - ability

Have other investments

Have investment property

Own or paying off home

16.

credit and debt

Women are highly confident in their ability to deal with credit cards and manage debt. Most women say they

can manage debt, but some say they only make minimum repayments on credit card debt and loans and

that they get into debt by buying things they can’t afford. Women are less likely than men to say that they

have credit cards and loans and more likely to have other sources of debt. Women are also less likely to feel

comfortable with their level of debt.

Credit cards can be effective and convenient tools, and loans can be an essential part of achieving longer term goals such as buying a home, but their costs, including repayments and fees and charges, should be understood and affordable.

most women are highly confident in their ability to manage debt (88%) and deal with credit cards (83%). while the majority of women recognise the importance of learning more about managing debt (61%), only around a half do so when it comes to dealing with credit cards (49%).

most women say that they have a credit card (71%), and regularly pay the total balance on their credit card when it is due (74%). however, some women say they typically only make the minimum repayment on their credit card (14%). most women also say that they won’t buy things that they can’t afford (76%), and that they feel comfortable with their level of debt (77%). most women agreed that there is no better way of saving money than paying off debt early (86%).

Around half of women say they have loans including mortgages, car loans and investment loans (55%), and many women report having other debts, such as hire purchases and loans for tertiary education (23%). most women say that they usually make more than minimum repayments on their loans (80%).

credit and debt – Women’S attitudeS and behaviour

71

74

77

86

55

23

80

76

14

Make more than minimum repayment on loan

Have other debt

Have loan

No better way of saving than paying off debt early

Comfortable with level of debt

Won't buy things I can't afford

Only make minimum repayment on credit card

Pay total credit card balance when due

Have a credit card



differences between genderswomen are less likely than men to report that they have the ability and understanding to manage debt, and more likely to report that they are uncomfortable with their level of debt. women are also less likely than men to report that they have a credit card and much less likely to pay the total balance owing on it when due. women are more likely to report that they have debts other than loans and credit cards. women are more likely than men to say that there is no better way of saving money than paying off debt early.

credit and debt – diFFerenceS betWeen genderS

Women Men


83

18

73

21

15

90

71

23

23

18

88

86

Don't pay total credit card balance when due

Have a credit card

Have other debt

Uncomfortable with level of debt

Managing debt - ability

No better way of saving than paying off debt early

18.

pLanning and retirement

Compared to budgeting, saving, dealing with credit cards and managing debt, women are less confident in

their ability to plan for their long-term financial future and ensure enough money for retirement. Women

are also less confident than men when it comes to planning for their long-term financial future and ensuring

enough money for retirement, but they are interested in learning more about planning for their financial

future, including in retirement.

planning is the best way to achieve security in the long term and in retirement, and the earlier people put their plan into action, the more choices they will have. The advantage of starting young is that savings can grow steadily over time.

while most women are confident in their ability to plan for their long-term financial future (77%), this is also the issue where the greatest proportion of women recognise the importance of learning more (78%).

women reported relatively low levels of ability with respect to ensuring enough money for their retirement (60%) – the second lowest level of ability reported by women. however, most women recognise the importance of learning more about ensuring enough money for retirement (72%), which is consistent with the relatively low level of reported ability.

most women agree that financial planning is not only important for those who have a lot of money (83%), while the majority disagree that retirement is too far away to think about (64%), and have personally thought about their long-term financial plans for the future and retirement (74%).

most women have a superannuation fund (78%) but do not think employer funded superannuation will be sufficient for retirement (73%). most do not believe the age pension will be sufficient (86%).

pLanning and retirement – Women’S attitudeS and behaviour

64

74

78

73

86

83

The age pension will not be sufficient for retirement

Employer funded superannuation will not be sufficient for retirement

Have a superannuation fund

Have thought about long-term financial plans

Retirement is not too far away to think about

Financial planning is not only for those with a lot of money



differences between genderswomen are much less likely than men to say they have the ability and understanding to ensure they will have enough money for their retirement, and to plan for their long-term financial future. however, women are more likely than men to recognise the importance of learning more about ensuring they have enough money for their retirement. They are also more likely to recognise that financial planning is not just important for those who have a lot of money. however, despite women being more likely to recognise the importance of these issues, men are more likely than women to say that they have personally thought about long-term financial plans for the future and retirement.

women are much less likely than men to say they have a superannuation fund. Consistent with the lower rates of superannuation coverage among females, women are also less likely than men to say that employer funded superannuation will be enough to cover their retirement needs.

pLanning and retirement – diFFerenceS betWeen genderS

Women Men


84

16

78

81

70

84

65

83

74

72

77

60

12

78

Have thought about financial future and retirement

Financial planning is not just for those with a lot of money

Ensure enough money for retirement - learning

Plan for long-term future - ability

Ensure enough money for retirement - ability

Employer funded super will be enough for my retirement

Have a superannuation fund

20.

protecting money

Women are highly confident in their ability to protect their money, including through choosing appropriate

insurance, understanding rights and responsibilities when dealing with money, and recognising a scam.

However, fewer women are confident in their ability to invest and the findings indicate that the majority

wouldn’t take key considerations into account when making an investment decision, so they may be more

vulnerable to scams than they think. Women and men report similar attitudes and behaviour when it comes

to protecting money.

protecting money means protecting people, their assets and income for security and peace of mind – but there’s more to protecting money than buying insurance. It also means understanding the risks of an investment decision, spreading risk by not putting all your eggs in one basket, and being wary of scams. If an investment opportunity seems too good to be true, it probably is.

most women are confident in their ability to choose appropriate insurance (81%), and the majority recognise the importance of learning more (65%). however, choosing insurance only ranks eighth for women in terms of ability and understanding, while ranking tenth in terms of recognising the importance of learning.

most women hold some form of insurance (87%), and believe in taking out insurance to be prepared for the unexpected (84%).

most women are confident in their ability to understand their rights and responsibilities when dealing with money (85%) and recognise the importance of learning more (74%), the second highest learning response for money management issues covered by the survey.

most women are confident in their ability to recognise an investment scam (87%), and the majority recognise the importance of learning more (68%). however, less than a third of women would consider risk and return when making an investment decision (30%), and very few would consider background information such as the reputation of the company (5%) and diversification (5%).

protecting money – Women’S attitudeS and behaviour

30

84

87

Consider risk and return whenmaking an investment

Believe in taking out insuranceto be prepared for the unexpected

Have insurance



differences between genderswhen it comes to protecting money, the reported attitudes and behaviours of women and men are fairly similar. however, women are more likely than men to report that they believe in taking out insurance to be prepared for the unexpected, and less likely than men to say they have the ability and understanding to recognise a scam.

protecting money – diFFerenceS betWeen genderS

Women Men


79

89

87

84

Recognising a scam - ability

Believe in taking out insuranceto be prepared for the unexpected

22.

inFormation and advice

Women are highly confident in their ability to get information about money with a majority having sought

financial information or advice from an accountant/tax agent or a bank, and just over a half from a financial

adviser. Fewer women are confident in their ability to understand financial language, consistent with their

level of confidence in ability to invest and ensure enough money for retirement, and most are interested in

learning more. Women and men report similar abilities in obtaining information about money and dealing

with financial service providers but there are substantial differences in their preferred sources of information

or advice. Women are more likely than men to consider getting information and advice from financial

advisors, banks, community services and government sources.

Collecting and understanding information is essential to good money management, and sometimes it’s important to get help. Information and advice are often thought of in relation to investment and taxation issues, but they can relate to anything from doing a budget to getting debt under control and understanding rights and responsibilities.

most women are confident in their ability to get information about money (84%), and the majority recognise the importance of learning more (69%). most women are confident in their ability to deal with banks or other financial service providers (81%), and the majority recognise the importance of learning more (67%).

Compared to other money management issues, fewer women are confident in their ability to understand financial language (60%), in fact, this is the lowest reported level of ability for any money management issue covered by the survey. however, the majority of women recognise the importance of learning more (70%).

most women say they spend a lot of time thinking about financial information before making a financial decision (74%). This contrasts with the findings regarding investing, where relatively low proportions of women would consider key issues before making an investment decision.

most women say they read their financial statements regularly (94%), and the majority read them every time (64%). most women say that they understand all or most of the information in their financial statements (79%).

inFormation and advice – Women’S attitudeS and behaviour

74

94

79Understand all or most of theinformation in financial statements

Read financial statements regularly

Spend a lot of time thinking aboutinformation before making a decision



differences between genderswomen are much less likely than men to report they have the ability to understand financial language, but are more likely to recognise the importance of learning more.

women are more likely than men to say that they spend a lot of time thinking about financial information before making a financial decision. women are less likely than men to report that they have used an accountant or tax agent for financial information or advice, but are much more likely to report that they have used a bank for these services.

inFormation and advice – diFFerenceS betWeen genderS

Women Men


68

66

72

69

53

60

70

74

60

66

Have used a bank for financial information or advice

Have used an accountant/tax agentfor financial information or advice

Spend a lot of time thinking aboutinformation before making a decision

Understanding financial language - learning

Understanding financial language - ability

There are some substantial differences between women and men when it comes to preferred sources of information and advice. women are more likely than men to report that they would use formal sources such as financial advisers, banks, and face-to-face sources such as community services and Centrelink. women are less likely than men to say that they would use informal sources such as work and friends, and print and electronic sources such as newspapers, magazines and the internet.

24.

Where peopLe Say they WouLd Seek FinanciaL inFormation or advice(SOme OF The GeNDeR DIFFeReNCeS mAy NOT Be SIGNIFICANT AT The 95% CONFIDeNCe level)

Women Men


50

51

25

41

32

50

36

49

54

57

63

55

81

80

48

47

44

44

33

30

32

50

51

53

63

65

81

84

TV/radio

Work

Centrelink

Business/money related magazines

Newspapers

Internet website

Community services

Government website

Seminars/educational institutions

Friends

Family

Bank

Accountant/tax agent

Financial adviser

while women report they are most likely to consider using financial advisers, then accountants and tax agents for financial information and advice, their actual behaviour does not reflect this. The majority of women say that they have actually seen an accountant/tax agent (66%) or a bank (60%), but only around half say that they have seen a financial adviser (54%).


concLuSionThe findings of this Chapter indicate that:

Although women are generally confident in their ability to manage money, some do not have good management •habits, both for issues where confidence in ability is high, such as budgeting, saving, and dealing with credit cards, and for issues where confidence in ability is relatively low, such as investing. For example:

around a half report that they don’t regularly budget for day-to-day expenses; –

around a fifth report that they are not easily able to keep track of everyday spending, could not get by –for some time in case of a financial emergency, or do not think about ways to reduce their spending;

around a fifth don’t save; –

around a fifth would get into debt buying something they can’t afford; –

around a quarter don’t pay the total balance owing on their credit card when it is due; and –

less than a third would consider both risk and return when making an investment decision. –

while women’s reported confidence in their ability to manage money is generally high, confidence is higher •for day-to-day money management issues than it is for more complex and less frequently encountered issues.

Confidence in ability is over 70% for all money management issues except investing (63%), ensuring –enough money for retirement (60%), and understanding financial language (60%).

The main inconsistency in women’s reported confidence in their ability relates to recognising scams. women are •highly confident in their ability to recognise scams, but relatively less confident when it comes to investing and understanding financial language. Combined with relatively low levels of recognition of some important aspects of investing which are also key to recognising scams, overall levels of confidence in recognising scams may not be well founded. This may, in turn, indicate a higher degree of vulnerability to scams.

In general terms, the findings indicate that women and men have similar day-to-day money management •behaviour, but apart from budgeting, women are less confident in ability than men, particularly in relation to the more complex issues. women also tend to be less comfortable with their financial situation and more conservative in their behaviour. For example:

although women are much more likely than men to report that they regularly budget for day-to-day –finances and more likely to think about ways to reduce spending, they are less likely to report that they could get by in case of a financial emergency;

women are slightly more likely – 4 than men to report that they have a separate account that is used just for savings, and more likely to save before they spend;

women are more likely to invest in the home they live in but less likely to invest in investment properties; –

women are much less likely than men to have investments such as shares, bonds, managed funds, –debentures and unit trusts;

while women are more likely than men to agree that the risks and returns of an investment –are unpredictable they are also much less likely to consider risk and return when making an investment decision;

women are less likely than men to report that they have credit cards and loans but more likely to report –that they have other types of debt such as school fees, hire purchase and higher education loans;

4 But not significant at the 95% confidence level

26.

women are more likely than men to believe that there is no better way of saving than paying off debt early, –but less likely to report that they pay the total amount owing on a credit card;

women are more likely than men to feel uncomfortable with their level of debt; –

women are much less likely than men to have a superannuation fund and much less likely to report that –they have the ability to plan for their long-term future and ensure enough money for retirement;

women are less likely to have personally thought about long-term financial plans for the future and for –retirement, even though they are much more likely to recognise the importance of planning ahead when they start work;

women are slightly more likely – 5 than men to report that they have insurance and much more likely to report that they believe in taking out insurance to be prepared for the unexpected;

women are less likely than men to report that they have the ability to recognise a scam or investment –scheme that seems too good to be true, consistent with lower levels of confidence in their ability to invest and understand financial language;

women are more likely than men to spend a lot of timing thinking about financial information before –making a financial decision;

women are much more likely than men to consider using financial advisers, banks, community services –and Centrelink for financial information or advice;

women are much more likely than men to have actually used a bank for financial information or advice and –less likely to have actually used a financial adviser; and

women are much less likely than men to consider using newspapers, business and money magazines and –the workplace as sources of financial information or advice.

5 But not significant at the 95% confidence level


ChapTEr 3: whaT wOmEN ThiNk abOuT mONEy

introductionThis Chapter examines the issue of confidence using the relationship between respondents’ self-reported levels of ability and understanding, and recognition of the importance of learning more as an indicator of confidence for each of the 13 money management issues covered by the survey.6

It also examines the attitudes and behaviours that can adversely affect financial literacy by:

preventing people from being aware of financial literacy issues; •

impeding financial literacy learning and education; and •

preventing knowledge and understanding from being translated into actual behaviour. •

Attitudes and behaviours interact in complex, overlapping and mutually reinforcing ways, often depending on the individual’s stage of life and their particular personal and financial circumstances. Due to this complexity and interdependence, it is not easy to understand how one functions in complete isolation from others.

what people think and feel about money issues impacts upon how receptive they are to learning about money. Overcoming and managing these attitudes is an important part of improving people’s ability and willingness to engage with their money in an informed way.

Combined with any difficulties people experience in assessing their true level of ability and understanding about money issues, they can have beliefs and emotions that affect their self-assessment of ability and understanding, and their progress towards a particular financial outcome.

6 In Chapter 2, confidence is discussed in terms of respondents’ self-reported ability for each of the 13 money management issues.

28.

abiLity and underStandingFor day-to-day money management issues where women are more likely to have regular and direct experience, their self-assessed level of ability and understanding is higher. Conversely, where the issues are less frequently encountered and/or require more specialised knowledge, such as investing, ensuring enough money in retirement and understanding financial language, the self-assessed level of ability and understanding is lower. Additionally, women generally reported lower levels of ability than men across the 13 money management issues, with a larger gap for the more complex issues.

abiLity and underStanding about money matterS i have the abiLity and underStanding in …

Women Men


90

88

90

89

86

85

84

82

68

65

75

84

82

91

88

88

87

85

84

60

60

63

77

81

81

83



Investing


Dealing with financialservice providers




Understanding rightsand responsibilities

Recognising a scam

Managing debt

Saving

Budgeting


differences between genderslevels of reported ability are generally lower for women than they are for men, however the differences are statistically significant at the 95% confidence level for seven of the 13 money management issues.

women are more likely than men to report that they have the ability and understanding to budget day-to-day finances.

women are less likely than men to report that they have the ability and understanding to:

manage debt; •

recognise an investment scam; •

invest; •

plan for the long-term financial future; •

ensure enough money for retirement; and •

understand financial language. •

It is worth noting that while women generally report lower levels of ability than men, this may indicate a more conservative approach to self-assessment of ability rather than a lower level of actual ability.

30.

LearningConsistent with their reported levels of ability, women attribute greater importance to learning more about relatively complex money management issues that can have significant financial consequences, such as planning for retirement and the long-term financial future, understanding rights and responsibilities when dealing with money, investing and recognising scams. learning more about day-to-day money management issues such as budgeting, dealing with credit cards and managing debt, is regarded as less important. Additionally, women generally reported higher levels of recognition of the importance of learning more about money management issues than did men.

importance oF Learning more about money matterSAT ThIS pOINT IN lIFe IT IS ImpORTANT TO leARN mORe ABOuT …

Women Men


64

63

61

57

49

65

71

69

67

66

70

73

77

68

67

66

65

61

49

57

68

69

70

72

74

78


Budgeting

Managing debt


Saving

Dealing with financial service providers

Investing

Recognising a scam




Understanding rights and responsibilities



differences between genderswhile women are generally more likely than men to recognise the importance of learning more about money management issues, the differences are not as large as they are in the case of reported levels of ability. The differences are statistically significant at the 95% confidence level for four issues.

women are more likely than men to recognise the importance of learning more about:

saving; •

ensuring enough money for retirement; and •

understanding financial language. •

women are less likely than men to recognise the importance of learning more about investing. This is of interest in that women are much less likely than men to say that they have the ability and understanding to invest.

conFidenceConfidence in money management is not a bad thing, since it is important that people have the confidence to take financial actions in anticipation of a positive result. however, overconfidence in ability and understanding of money matters can mean that mistakes are made and opportunities missed.

A substantial academic literature in cognitive psychology makes the case that people are usually overconfident and, in particular, they are overconfident about the precision of their knowledge.7 In general, people tend to overestimate their ability to do well at tasks, are unrealistically optimistic about future events, and have unrealistically positive self-evaluations.

International financial literacy research suggests overconfidence regarding financial knowledge and understanding is a significant issue that impacts upon both the degree to which people seek financial information and advice, and the financial decisions that they subsequently make.8

A 2005 OeCD report discusses research across 12 countries that found that respondents felt they knew more about financial matters than was actually the case.9 This was particularly clear in research which combined objective tests (that measured knowledge and understanding of financial terms and ability to apply financial concepts to particular situations), with self-assessment (respondents’ perceptions of their financial understanding and knowledge).10

‘Respondents in the US, UK, and Australia felt confident in their knowledge of financial issues even though when given a test on basic finance it is clear they had only a limited understanding of these issues. If consumers do not realise they need information, they will not be in a position to seek it.’ 11

Overconfidence reduces demand for financial education and the degree to which people seek financial information and advice. In this study, most respondents reported that they spend ‘a lot of time’ thinking about financial

7 See T Odean, Volume, Volatility, Price and Profit when all Traders are Above Average, Graduate School of management, university of California -

Davis, united States of America, draft April 1998.

8 For an overview of overconfidence in relation to financial literacy research, see A lusardi and O mitchell, Financial Literacy and Retirement

Preparedness: Evidence and implications for financial education programs, michigan Retirement Research Centre, working paper 2006-144, November 2006, p. 8.

9 OeCD, Improving Financial Literacy: Analysis of Issues and Policies, OeCD publishing, paris, France, 2005, pp. 43-44.

10 For example, ANZ Survey of Adult Financial Literacy in Australia, conducted by ACNielsen Research, melbourne, November 2005.

11 OeCD, op. cit., pp. 43-44. In the 2005 ANZ survey of financial literacy, 67% of respondents said that they understood the principle of compound

interest, but only 28% were rated with a ‘good level’ of comprehension when they solved an actual problem.

32.

information before making a decision, and most reported that they try to stay informed about money matters. however, some people will consider themselves to be informed when they are not, regardless of whether they have spent a lot of time thinking about financial information before making a decision. If they are overconfident, they may overestimate the effectiveness of spending a lot of time and being informed, and remain unaware of their overconfidence and the adverse impact it may have on how they manage their money.

‘The fact that consumers feel more confident than their actual financial knowledge warrants, suggests that an important aspect of financial education programs is increasing consumers’ awareness of their need for financial information. If consumers are not aware they need financial information, they will not seek it out. Thus policymakers need to think about the best ways to reach these consumers and convince them that they need financial education.’ 12

using the relationship between respondents’ self-reported levels of ability and understanding, and recognition of the importance of learning more, as an indicator of confidence assumes that, generally speaking, people who say they have the ability and understanding regarding a particular money management issue are more confident in dealing with that issue than those who say they do not. Conversely, those who recognise the importance of learning more about a particular money management issue are less likely to be confident in dealing with that issue than those who do not.

A proxy measure for overall confidence is derived by comparing reported levels of ability and understanding with reported levels of recognition of the importance of learning more. The gap indicates the relative levels of confidence between different money management issues, with a positive gap indicating a relatively higher level of confidence and a smaller or negative gap indicating a lower level of confidence. As with all measures of self-reported confidence, this measure does not indicate that confidence is necessarily well founded in terms of ability, understanding and practice.

The table below presents the relative confidence levels across the 13 money management issues for women and men, with higher numbers being indicative of higher confidence levels.

reLative LeveLS oF conFidence – Women and men

topic (highest to lowest level of confidence) Women’s confidence % men’s confidence %

budgeting 34.0 32.4

dealing with credit cards 33.2 34.4

managing debt 27.2 28.7

Saving 22.0 24.1

recognising a scam 18.3 20.3

choosing appropriate insurance 16.4 18.6

getting information about money 15.5 18.0

dealing with financial services providers 13.5 16.7

understanding rights and responsibilities 10.7 12.6

planning for the financial future -0.9 7.2

investing -5.6 3.7

understanding financial language -10.4 1.5

ensuring enough money for retirement -11.6 -4.4

12 OeCD, op. cit., p. 45.


For the purposes of this discussion:

large positive gaps (above 20%) indicate high levels of confidence; •

gaps of between 10% and 20% indicate more moderate levels of confidence; and •

small (less than 10%) or negative gaps indicate relatively low levels of confidence. •

A positive gap is evident for issues where levels of exposure and familiarity with particular money management issues are high, and where people are more likely to have a sense of control regarding processes and outcomes. It is also evident that the gap is smaller or negative in areas of greater complexity, greater uncertainty regarding processes and outcomes, and where third parties are involved in transactions.

The findings indicate that:

Although relative levels of overall confidence vary between women and men, with the exception of budgeting •and dealing with credit cards, the 13 money management issues are ranked identically for women and men.

The differences between women and men increase with increasing complexity of the issue. Differences are •generally less than 2% for the money management issues where confidence is high, generally between 2% and 3% for the money management issues where confidence is more moderate, and much greater (7% to 12%) for the money management issues where confidence is relatively low.

with the exception of budgeting, women have lower levels of overall confidence than men. •

For women, there are four money management issues where reported recognition of the importance of learning •more is greater than reported ability and understanding, ie. the gap between the two measures is negative. These four issues: planning for the financial future; investing; understanding financial language; and ensuring enough money for retirement, represent a logical grouping. That is, understanding financial language is integral to investing and investing is integral to both planning for the financial future and ensuring enough money for retirement.

For men, the gap between the two measures is negative for only one issue: ensuring enough money for •retirement, although men’s overall level of confidence is also relatively low for planning for the financial future, investing and understanding financial language.

34.

attitudeS and behaviourSwhat people think and feel about money issues impacts upon how receptive they are to learning more about money. Some attitudes can be widely held and have a relatively low impact on financial literacy, while others can be narrowly held and have a relatively large impact. Overcoming and managing these attitudes is an important part of improving ability and willingness to engage with money in an informed way.

Respondents were asked to assess their level of agreement with nine statements that could be characterised as contributing to poor or suboptimal financial outcomes.

attitudeS to moneyI AGRee ThAT…

Women Men


34

29

23

19

15

35

37

43

59

42

38

29

34

21

16

23

52

52

I (do not) try to stay informed about money matters and finances

I (do not) spend a lot of time thinking aboutfinancial information before I make a decision

Nothing I do will make a big difference to my financial situation

Financially, I like to live for today

Dealing with money is boring

Money is (not) important to be happy in life

Thinking too much about my long-termfinancial future makes me feel uncomfortable

Dealing with money is stressful and overwhelming

Money is just a means to buy things

differences between gendersThe differences are statistically significant at the 95% confidence level in relation to seven attitudes.

women are more likely than men to believe that:

dealing with money is stressful and overwhelming; •

thinking too much about the long-term financial future causes discomfort; •

money is (not) important to be happy in life; •

dealing with money is boring; and •

nothing they do will make a big difference to their financial situation. •


women are less likely than men to believe that:

money is just a means to buy things; and •

financially, they like to live for today. •

The remainder of this Chapter examines each of these attitudes and the strength of their relationship with 20 behaviours that could not be said to be financially literate.

The 20 selected behaviours have been drawn from the seven money topics covered in chapter 2:

budgeting I am not easily able to keep track of my everyday spendingI do not think about ways to reduce my spendingI have problems setting money aside for big purchases or spendingI do not regularly do a budget for day-to-day finances

Saving I did not save any money in the last six monthsI save only when I want something big or specialI do not save

investing I would not consider risk and return when making an investment decision

credit and debt I tend to fall behind on loan repaymentsI usually only pay the minimum amount owing on credit cardsI do not feel comfortable with my level of debtI do not regularly pay the total balance owing on my credit card when it is due

planning and retirement I believe that financial planning is only important for those who have a lot of moneyI believe that retirement is too far away to think aboutI have not thought about long-term financial plans for the future and retirement

protecting money I do not believe in taking out insurance to be prepared for the unexpectedI do not have insurance

information and advice I rarely or never read financial statementsI check only the balance on financial statementsI understand only some or none of the information in financial statements

The charts that follow compare the proportion of women and men who report behaviours that could not be said to be financially literate, with the proportion of respondents (women and men respectively) who report that they hold a particular attitude. For example, as discussed in the next section of this chapter, women who believe that money is not important to be happy in life are more likely than all female respondents to believe that retirement is too far away to think about. however, men who believe that money is not important to be happy in life are not more likely than all male respondents to believe that retirement is too far away to think about.

The nine attitudes have been presented in ascending order of association with the incidence of behaviours.

For the purposes of the discussion:

attitudes that impact on seven or less behaviours have been assessed as having a relatively minor impact on •behaviour;

attitudes that impact on between eight and 13 behaviours have been assessed as having a moderate impact on •behaviour; and

attitudes that impact on 14 or more behaviours have been assessed as having a relatively large impact on •behaviour.

The impact of attitudes on behaviour is determined in part by whether there is sufficient motivation for the individual to make a behavioural change and, in effect, overcome the barriers that stop them engaging with money. chapter 4 of the Financial literacy – Australians understanding money report discusses motivation and building ability in some detail, and how self-efficacy can help to overcome attitudinal barriers.

In the following commentaries, all comparisons are significant at the 95% confidence level.

36.

money is (not) important to be happy in life

While it is true that money can’t buy happiness, good money management can make a big difference to

people’s lives and therefore their happiness, especially over time.

women are more likely than men to say that money is not important to be happy in life (38%/35%). The proportion of women holding this attitude generally increases with age and decreases with household income.

women who say that money is not important to be happy in life are more likely than women overall to exhibit only one of the 20 behaviours that are not indicative of financially literate behaviour. Compared to the other attitudes, holding this attitude has the smallest impact on behaviour.

For women, this attitude impacts on only one behaviour, which is related to planning and retirement.

Differences between genderswomen who hold this attitude are more likely than women overall to believe that retirement is too far away to think about. For men, this is not the case.


impact oF attitudeS on behaviour – money iS not important to be happy in LiFe

Tend to fall behind on loan repayments

Didn’t save any money in the last 6 months

Rarely or never read financial statements

Don’t believe in taking out insurance to be prepared for the unexpected

Check only the balance on financial statements

Don’t have insurance

Usually only pay the minimum amount owing on credit cards

Save only when wanting something big or special

Believe financial planning is only important for those who have a lot of money

Not easily able to keep track of everyday spending

Don’t think about ways to reduce spending

Don’t feel comfortable with level of debt

Believe retirement is too far away to think about

Understand only some or none of the information in financial statements

Don’t save

Don’t regularly pay the total balance owing on credit cards when due

Have not thought about long-term financial plans for the future and retirement

Have problems setting money aside for big purchases or spending

Don’t regularly do a budget for day-to-day finances

Would not consider risk and return when investing

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80% 60% 40% 20% 0% 20% 40% 60% 80%

Overall WomenMen

Hold attitudeOverall

Hold attitude

38.

money is just a means to buy things

Holding this attitude can reflect a lack of appreciation or understanding of how money can be made to

work and assist in achieving goals. In this sense, money is not just a means to buy things, but a way to

achieve broader life goals such as security and peace of mind, as well as more specific goals which may have

significant and lasting value. People who agree that money is just a means to buy things may miss significant

opportunities to improve their financial wellbeing.

women are much less likely than men to say that money is just a means to buy things (52%/59%). The proportion of women holding this attitude generally decreases with age and decreases with household income.

women who say that money is just a means to buy things are more likely than women overall to exhibit three of the 20 behaviours that are not indicative of financially literate behaviour. Compared to the other attitudes, holding this attitude has a relatively minor impact on behaviour.

For women, this attitude impacts on all three behaviours which relate to planning and retirement. For this group of people, there may not be a full appreciation of money’s capacity to assist in achieving more significant long-term goals.

Differences between gendersFor those holding this attitude, there were no differences in behaviour between the genders.


impact oF attitudeS on behaviour – money iS juSt a meanS to buy thingS

Tend to fall behind on loan repayments

Didn’t save any money in the last 6 months

Rarely or never read financial statements

Don’t believe in taking out insurance to be prepared for the unexpected

Check only the balance on financial statements

Don’t have insurance

Usually only pay the minimum amount owing on credit cards

Save only when wanting something big or special

Believe financial planning is only important for those who have a lot of money

Not easily able to keep track of everyday spending

Don’t think about ways to reduce spending

Don’t feel comfortable with level of debt

Believe retirement is too far away to think about

Understand only some or none of the information in financial statements

Don’t save

Don’t regularly pay the total balance owing on credit cards when due

Have not thought about long-term financial plans for the future and retirement

Have problems setting money aside for big purchases or spending

Don’t regularly do a budget for day-to-day finances

Would not consider risk and return when investing

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80% 60% 40% 20% 0% 20% 40% 60% 80%

Overall WomenMen

Hold attitudeOverall

Hold attitude

40.

nothing i do will make a big difference to my financial situation

This is a unique attitude in that the sense of powerlessness it indicates may prevent any kind of engagement

with money. Differences may not be perceived as big if they have low monetary value, or little or no

immediate impact. However, differences, including little ones, may have significant meaning or value,

especially over time, and therefore doing something like managing money well on a day-to-day basis, will

make a big difference.

women are more likely than men to say that nothing they do will make a big difference to their financial situation (23%/19%). The proportion of women holding this attitude increases with age and decreases with household income.

women who say that nothing they do will make a big difference to their financial situation are more likely than women overall to exhibit 11 of the 20 behaviours that are not indicative of financially literate behaviour, especially three of them. Relative to the other attitudes, holding this attitude has a moderate impact on behaviour.

women who hold this attitude are far more likely than women overall to believe that financial planning is only important for those with a lot of money (3

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