Financial Literacy Women

Improving Financial Literacy Is Empowering Women

An Honest Look at the Connection between a Woman’s Financial Literacy and Her Financial Future

Women have made tremendous progress in various economic aspects over the years. However, women still trail men when it comes to financial literacy. Financial literacy refers to an awareness of the skills and tools needed to make informed decisions when using your money.

Still, as financial educators, counselors, and most consumers can confirm from experience, knowing something and doing it properly are two very different things. While that might seem to level the field a bit, financial literacy plays a foundational role in complex decisions like investing and insurance.

Due to the traditional roles of men and women in the household, women’s role in money management has sometimes been incomplete, particularly in decisions of investing and big-ticket purchases were involved. However, there are many investment options for stay-at-home moms which can move them toward financial independence and empowerment.

Not surprisingly, low financial literacy, which is the forerunner of poor financial decisions and ineffective financial behaviors, can lead to multiple challenges for the modern woman for various reasons, especially because women tend to live longer than men, and women tend to retire earlier than men. Consequently, to maintain the same lifestyle in retirement…

A woman’s retirement fund needs to be larger than a man’s

This reality points to an urgent need to increase the levels of financial literacy among women today. Otherwise, those women in traditional household roles and those leaving such roles will find themselves less prepared to secure their financial future.

This article will focus on several principles to help women improve their financial situation, no matter where they start, by becoming more financially literate and financially effective in practice.


The first step to a stable and secure financial future for women (and men) of any age involves securing and growing personal income. Whether you’ve been in a traditional household role and are entering the workforce by choice or by force (widowed, divorced, or partner unemployment), or you are just leaving high school and ready to take on the world, earning an income will take top priority on your financial to-do list.

Without income, none of the important principles in the rest of this post will do you much good.

  • Securing a good income involves various combinations of the following:

  • Continuing your education and getting additional certification(s)

  • Earning a post-secondary degree

  • Expecting and negotiating fair and reasonable salaries

  • Exploring and accepting the risks and rewards of entrepreneurship and business ownership

  • Having a strong understanding of career opportunities in different economic environments

  • Identifying your strengths and skills and knowing their value (what consumers are willing to pay for them)

  • Overcoming critics and naysayers, personal and physical challenges, and cultural and social barriers

  • Researching and recognizing trends in various careers


The next step in building your finances must revolve around controlling your expenses.

The best way to do this involves the creation and use of a budget, which is also known as a spending plan. With a budget, you develop a plan of action that helps you allocate your income into five standard headings: giving, saving and investing, paying bills, paying off debts, and enjoying.

Budgeting helps you understand where your money comes from and where you plan to spend it.

Follow these basic steps to make a basic budget of your own:

  • Gather your financial documents (paystub, bank statements, and bills) and make a list of all your monthly expenses and incomes.

  • Categorize your expenses as fixed (recurring every month at the same cost), variable (recurring every month but at different costs), or periodic (all others).

  • Calculate your total income and expenses separately. If your income is greater than your expenses, it means that you are planning to spend your money properly.

  • If your expenses are more than your income, you will either need to cut down on some unnecessary expenses, find ways to increase your income, or do a bit of both.

Along with identifying and eliminating unnecessary expenses, you can also use a budget to set limits on your spending and prioritize your debt repayments.

Credit Building

Whenever you apply for credit, lenders look for a good credit score to determine your eligibility and to set loan terms such as the interest rate and the down payment.

A credit score attempts to show lenders how likely you are as a borrower to repay the lent money on time as agreed. The higher the score, the better.

For individual borrowers, the FICO score dominates the lender decision-making process. This score ranges from 300 to 850 points.

A score in the mid-to-upper 600s (e.g. 680) is often considered good while lenders typically consider a score of 750 or 760 as excellent. It is actually left up to each individual lender to determine what is a poor score, a good score, or an excellent score.

You can build a good credit score even if you do not use a traditional credit card or have any loans. Here’s how:

Consider applying for a secured credit card. This type of credit card looks a lot like a prepaid card. Like a pre-paid card, you deposit a specific amount of money, but instead of that deposit going onto the card, it goes into a savings account (usually between $300 and $1,000) that the bank or credit union holds as collateral while you use the card. That deposit equals your new credit card limit, and you get the deposit back once you close the card or convert it to a standard credit card (usually after 12 months or so). Look for a bank or credit union that has no annual fees associated with the card.

If you use the card, be sure to make your payment on time. Your history of debt payments makes up the most important factor in determining your credit score.

Besides looking for an affordable secured card, make sure that the issuer of your card reports your credit activity to the credit bureaus. If the activity is not reported to the credit bureaus, it will not build your FICO scores.

Debt Elimination

Eliminating debt should take top priority. While women, in general, earn more undergraduate and advanced degrees than men, the bad news is that such achievements mean that women generally have more student loan debt than men.

If you don’t repay debts of any kind in a timely manner, you will likely have to pay penalties on them. Late payments will also affect your credit score.

Apart from prioritizing repayments in a budget, here are some more ways to eliminate debt:

  • Do not take on additional consumer debt once you have repaid your previous debt.

  • Increase the monthly payment amounts on your current debts so that you can pay them off faster.

  • Negotiate with your lender for a lower interest rate. The lower your interest, the faster your payment will lower your total balance due.

  • Consider transferring your loan to another lender with a lower interest rate. Just make sure not to run the newly-zeroed-out account balance back up after paying it off.

Debt Prevention

The best way to live debt-free includes preventing yourself from going into it in the first place. Check out these tips to help with your goal of living free of debt:

  • Choose to pay with cash whenever you can.

  • Avoid putting yourself in the position where an impulsive purchase becomes likely (e.g. grocery shopping after work, taking a credit or debit card to go “window shopping”, etc.)

  • Set a spending limit on your budget and stay within it.

  • Never take out a loan to repay another loan unless you are committed to a plan that lowers the interest and has you out of debt faster.

  • Consult with a credit counselor if you feel that you cannot consolidate your debt repayment on your own.

Financial literacy and women empowerment can go hand in hand. Increasing your financial literacy can give you a clearer roadmap to your career, it might help you achieve your life goals more effectively, or it might just do both.

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