Crisis Management: How To Shield Women From Taking The Hardest Hit

Mutual Funds

The consequences of the pandemic are smack in front of us. COVID-19 case numbers are soaring even as economic repercussions pull harder and harder on Americans. The headlines provide a daily stark reminder of the wide-ranging implications, from growing food-bank lines to derailed educational dreams to abandoned careers.

 One big group has been hit especially hard by this crisis. I am talking about women. New research sheds some light on why women are bearing the financial brunt of this pandemic, why they will pay a high price in any crisis that comes next, and what we can d o about it.

Here are some of the findings. Women were already financially fragile before the pandemic hit. In January 2020, when the unemployment rate was at an all-time low, the stock market was roaring and the 2007-2008 recession was a distant memory, about 1 in 3 women would have been unable to handle a small financial shock, let alone a big one. They would have been daunted by an unexpected medical bill, an unplanned car repair, a refrigerator that needed replacing. This financial fragility was accompanied by another vulnerability: Most women do not have the knowledge and skills required to make financial decisions in times of crisis.

Since 2017 and in collaboration with the TIAA Institute, we have been collecting data that helps us understand personal finance and the financial knowledge among households in the United States. Our objective is to follow what happens to Americans’ wallets, especially in the face of high—and increasing—costs of education, housing and health care.

Because personal finances are, well, personal, and people are very different, each year we have oversampled a group within our study population. There are many advantages to collecting data at a regular frequency. It allows us to compare findings across time and assess whether things are getting better or worse. Much like an annual physical exam with a doctor, a yearly check-up of Americans’ personal finances can also detect symptoms of problems before they flare up. Most importantly, by annually collecting data, we end up with useful information in advance of potentially important events. This makes it possible to look at the data before and after the event. In the case of the pandemic—since it is still with us—we can examine the data before COVID-19 hit and gauge how and why the pandemic may ravage not only our physical but also our financial health.


Our survey asked about personal finance knowledge related to areas where people routinely make decisions. This includes saving, investing, borrowing, and managing risk, as well as the sources of information people consult for guidance. Our findings are sobering. Women correctly answered only about half of the personal finance questions. That is not a passing grade.

Since our survey has many questions to measure personal finance knowledge, we also can drill down on the topics that people know the best and the least. What is worrisome is that women know very little in areas that are critically important in times of crisis: risk and risk management. Women can answer only 34 percent of the questions related to risk and risk management.

Because we oversampled women, we can look in more detail at that data. Women are not homogenous when it comes to their understanding of personal finance. Even though financial literacy is low overall among women, lack of knowledge is particularly severe among some groups. For example, African American and Hispanic women correctly answered only 38 percent of the personal finance questions versus 54 percent of questions among their white peers. Even more, knowledge among those minority groups is particularly low in areas that matter most right now: risk, insuring and investing.

We should be worried about these findings. We should also get serious about the way to address them. Financial literacy matters!

The data we collected looked not only at knowledge but also at women’s personal finances. The objective of people is not to save more or borrow less, it is to be financially secure, to not have to worry about their situation. For that reason, the indicators we used went beyond balance sheets in order to assess financial well-being. Well before the COVID-19 crisis, women’s financial security was thin.   

As many as 30 percent of women would be in trouble if an unexpected expense arose. Even if given a month, they said they were not confident they could come up with $2,000. This percentage shoots up to 45 percent among African Americans and Hispanic women. Many women said they were unable to save regularly for their retirement—or even to plan for it. And 34 percent stated that debt constrained their choices. (Half of the African American and Hispanic women sample said debt affected their choices.) In other words, many women were in dire financial straits even when the economy was doing well.

Those who know more do better. All the troubling financial behaviors of women are connected to financial knowledge—or the lack of it. In particular, financial literacy serves as a shield against shocks; those who are more financially literate are less financially fragile. That means they are better prepared when entering and navigating a crisis.

This year we added a new question to our survey: We asked respondents how many hours per week they spend thinking about and dealing with issues and problems related to personal finances. We also asked how many of these hours occur at work. The findings are staggering. Women with low financial literacy spend as many as 16 hours—two full work days—worrying about and dealing with personal finance issues. Out of these 16 hours, 8 hours occur at work.

These data point to one solution, especially for employers. Back-of-the-envelope calculations—the hours a woman spends worrying multiplied by her wages—provide a simple estimate of the cost of financial illiteracy. If that number exceeds the price tag for financial education programs in the workplace, it is time for employers to join the financial education bandwagon.   

Although, workplace financial education programs can save money, not just any seminar or workshop or online exercise is effective. Data tells us that one-size-fits-all programs do not succeed with a population like women, which is marked by diverse challenges and disparate financial circumstances. Among other things, for programs to be successful for women, they will need to address concepts such as risk and risk management and pay attention to the specific needs of minority groups.

The COVID-19 pandemic gives us an opportunity to reimagine our future. We cannot return to the “normal” we knew before the crisis because that normal was not good enough. As we look forward, it is clear that one of our priorities must be to invest in women to ensure they are more financially resilient and secure.

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