MoneyCounts: A Financial Literacy Series Financial Literacy for Women Dr. Daad Adel Rizk Director, Penn State Financial Literacy Center 128A Outreach Building University Park PA 16802 https://financialliteracy.psu.edu/ dar39@psu.edu 814-863-0214

Learning Objectives Define financial literacy for women Financial challenges for women Effective budgeting strategies Debt management principles Vehicles for saving and investing

Money and ME What does money mean to you? In one word, define your relationship with money? Example: Freedom, Security, Toxic, Drama, Struggle, Problem, Power, Misery, etc.,

Four Elements of Financial Well Being In summary, financial well-being can be defined as a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow enjoyment of life. The four elements of financial well being (cfpb) Present Future   Security Control over day-to-day Capacity to absorb financial shock Month to month finances Freedom of Choice Financial freedom to make On track to meet financial goals Choices to enjoy life Consumer Financial Protection Bureau (Jan 2015)

Women in the United States Total population in the U.S. = 325 million (men, women, children) Women in the U.S. = 166 million (51% of total population) Women in the workforce = 75 million (45% of total women) Women not in the workforce = 91 million (55% of total women) 26% of women in the U.S. do not work (ages 25–54) No income No savings No retirement plan Source: U.S. Bureau of Labor Statistics (BLS), Current Population Survey (CPS)/ Graph by the Women’s Bureau, U.S. Department of Labor

U.S. National Debt Clock http://www.usdebtclock.org/ 42 million living in poverty (for every 7-8) 42 million receiving food stamps 31 million without insurance (for every 9) 873 thousands bankruptcies 514 thousand foreclosures

26% Single with Children

Employment of Women

“Pink Collar” Jobs Women as a percentage of total employed in selected occupations, 1985–2012 annual averages

Weekly earning by women

Distribution in labor force

College Graduates and Debt

Student Loans Total U.S. student loans: $1.4 (T) Average loan for college graduate = $27,000 Women college graduates are carrying 60% of student debts Average loan monthly payment is between 8–20% of women’s net income U.S. Debt Clock.org

Credit Card Debt Total U.S. credit card debt = $867,784, (B) Average credit card debt = $5,600 FINRA (Financial Industry Regulatory Authority, Inc.) 2009 study of 28,000 people: Carrying a credit card balance: 55% of men, 60% of women Making only minimum payment: 38% of men, 42% of women Paying a late fee: 23% of men, 29% of women Over-the-limit fee: 15% of men, 16% of women

Moms as Breadwinners 10 million Mother as the Sole or Primary Provider: 1960–2011 10 million

The Lost Years Women spend, on average, 13 years out of work Maternity and family reasons Care of elderly Effect on retirement Effect on Social Security Effect on savings and investing

Social Security Is Neutral with Respect to Gender Women represent 56% of all Social Security beneficiaries age 62 and older, and approximately 68% of beneficiaries age 85 and older. In 2011, 48% of all elderly unmarried females receiving Social Security benefits relied on Social Security for 90% or more of their income. In 2011, the median earnings of working-age women who worked full-time, year-round, were $36,500, compared to $48,000 for men. Can we do better?

Ladies Last! 5–7 Years Average Gap

“Bag Lady Syndrome”

Financial Literacy for Women Financial literacy is a serious issue facing women in the United States (and globally) Women earn less over a lifetime Women spend more than 11–13 years out of work Women save and invest little, if any Women acquire same or higher debts Women end up divorced (50%) Women live longer (5–7 years) Women end up with little if any “nest egg” Women fear “bag lady” syndrome

Top Financial Missteps Women Take Let husband or partner manage the money without their involvement Sign income tax return without understanding or reading it Not taking into account women’s greater longevity Not asking enough financial questions Not sharing care of children and elderly with their partners Not having their own savings, checking, debit and credit cards Not preparing for long-term financial decisions In divorce, women tend to keep the mortgage instead of pension or retirement income In divorce, women tend to fail to identify debts, credit cards Fail to protect against future assets, change of will, beneficiaries

What women are saying? https://www.youtube.com/watch?v=DDwgYvZ4qQw

Education and Empowerment! Educate yourself about money management and investing Do not rely on someone else for your financial security Husband, boyfriend, father Get more education/training Financial Literacy Aim for self-improvement at work Keep moving ahead in your career Break the traditional feminine career track

Set Financial Goals Set SMART goals – it’s key to financial success S = Specific M = Measurable A = Attainable R = Realistic T = Timely

Budget as % of net income

Eliminate Debts Strategies to eliminate debts Credit card debts Student loans Car loans Other loans Interest rate, total cost of loans (terms) Know your rules (10% monthly payment)

Saving for a specific goal Emergency Fund ? How many months? Saving for a specific goal Vacation Car Furniture, etc.,

Investment vehicles: Investing Retirement account (401K) Additional retirement accounts (403, 427, IRA, Roth IRA, etc.,) Accumulation of assets – real estate Stocks, Bonds, Mutual Funds, Futures, Commodities, etc.,

Put Your Name on It! Don't let the fear of losing money, fear of failure, or fear of the unknown stop you from investing Buy your own home Buy your own car Have an emergency savings account in your name – emergency fund Establish your own credit worthiness (credit cards and debt management) Be financially independent Invest in your retirement Have a credit card in your name – keep it paid in full monthly Protect your financial reputation Protect your identity Be your own Knight in Shining Armor! A man is not a financial plan!

What Can Women Do Collectively? Advocate for Women: to receive the pay they deserve and equal work conditions to have access to higher-paying jobs for women in the workforce to have affordable child and elder care, as well as access to quality flexible work and paid family leave to receive the support they need through expanded tax credits to help meet the costs of raising their families

Money and ME What does money mean to you? In one word, define your relationship with money? Example: Freedom, Security, Toxic, Drama, Struggle, Problem, Power, Misery, etc.,

MoneyCounts: A Financial Literacy Series Thank You! Comments and Questions Dr. Daad Adel Rizk Director, Penn State Financial Literacy Center 128A Outreach Building University Park PA 16802 https://financialliteracy.psu.edu/ dar39@psu.edu 814-863-0214