Closing the gender gap in financial literacy

According to data from the Federal Reserve's Economic Well-Being of US Households from 2022, 54% of women respondents answered a lower percentage of financial literacy questions correctly compared to 66% of male respondents. In addition, according to the US Department of Education, 3.8 million American adult women possess financial literacy skills below a “basic” level.

Sorbet Co-Founder and CEO Veetahl Eilat-Raichel joins Wealth! to give insight into how Americans can close the gender gap in financial literacy and how Americans can feel more secure in taking a deep dive into their financial situations.

Eilat-Raichel begins to talk about financial literacy, stating: "I think first of all it's not just a gender issue. Generally speaking about 55% of Americans say that they're scared to look into their bank account. By nature, there's always a little bit of a gap between men and women as well, and so a lot of it should change on the educational level, but I think people are a lot more scared than they actually should be... and there are baby steps you can take to regain agency, and empower yourself to take control over your finances."

She continues later on by giving a finance hack that most Americans should know: "I think one of my favorite hacks is telling people to look into their benefits that they receive from their employers... There's a lot of hidden cash, and in fact, one of my favorite hacks is looking into your paid time off... People across the US get a substantial amount of paid time off paid by their employer. They actually don't end up using it, and we're kind of programmed to think about it in terms of vacation days we can take. Those are actually worth dollars and cents..."

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Editor's note: This article was written by Nicholas Jacobino

Video Transcript

BRAD SMITH: Well, April is Financial Literacy Month, which places a spotlight on the basics of banking, investing, and how to manage your money so that we all collectively are educated enough to feel stable and secure. But the Federal Reserve, they found a striking disparity in how confident men and women feel with their own money.

54% of women answered a lower percentage of financial literacy questions correctly compared to the 66% of men answering the same questions. Let's bring in to discuss this a little bit more and how we can really close that gap here, Veetahl Eilat-Raichel who is joining us and Sorbet Cofounder and CEO. Thanks so much for taking the time here. First and foremost, you hear a stat like that, what needs to change in how we're educating people broadly and making sure that we're also closing that gap?

VEETAHL EILAT-RAICHEL: Well, I think, first of all, it's not just a gender issue. Generally speaking, about 55% of Americans say that they're scared to look into their bank account. By nature, there's always a little bit of a gap between men and women as well. And so a lot of it should change on the educational level.

But I think people, you know, are a lot more scared than they're actually should be. It's not that scared. And there baby steps that you can take to kind of, you know, regain agency and empower yourself to take control over your finances.

BRAD SMITH: Some of the tips that you have out there include resetting your budget for today's prices. So adjusting your own spending habits for inflation perhaps is the best way we can summarize it here. How can people put that into motion and leverage some of the new financial literacy terms they may use and learn during April in order to adequately do so?

VEETAHL EILAT-RAICHEL: Well, one thing is first to recognize that things are a little bit more expensive now than they used to be. And it's about being a little bit more conscious about things that you are kind of habitually are consuming. But their prices may have changed in the last few months. And we're definitely all feeling it in our pockets. So monitoring that, and not going on autopilot. And looking into things like subscriptions or things that you have on autopay and making sure that these don't creep up on you and they haven't become a lot more expensive than you were used to in the past.

BRAD SMITH: You know, I wonder, and we're going to do a roundup throughout the entire month, just got this idea, it's fresh. I haven't even told the producers yet. So we're starting here, Veetahl, your favorite term that people should remember over the course of Financial Awareness and Literacy Month?

VEETAHL EILAT-RAICHEL: I think one of my favorite hacks is telling people to look into their benefits that they receive from their employers. A lot of people are not aware of that. But in your benefits package in your work, there's a lot of hidden cash. And in fact, one of my favorite hacks is looking into your paid time off.

You kind of touched on that in your previous segment but people across the US get a substantial amount of paid time off paid by their employer. They actually don't end up using it. And we're kind of programmed to think about it in terms of vacation days we can take but those are actually worth dollars and cents. And that's a really interesting hack that I would recommend people look into.

BRAD SMITH: Certainly. And as we think about the therapy that's involved for yourself as well and we're looking at some of the fast stats on Sorbet, your company here, amazing work that you have been able to put forth here. Where do you see and envision people being able to be their own financial therapist along the way as well? Because the mentality needs to shift if you're going to see a concerted effort really pay off for an extended period of time.

VEETAHL EILAT-RAICHEL: So a lot of it is awareness and education. And people are intimidated by it, as we said before, even looking into their bank account. But it's as simple as looking, right? Go into your bank account. Look at your last few statements. Understand what you're spending money on. It's not that complicated. People feel like they need to be super financial sophisticated. It's not really that complicated.

Look into your last few months, understand what you're spending on, understand things that may have been-- may have become more expensive as we said before. Read your employee handbook, understand your employee benefits. It's not that complicated. Start by just educating yourself, that's the first step. A lot of things will become a lot easier once you understand what you have and where you are and then taking steps to improve on that will come very easily thereafter.

BRAD SMITH: Veetahl Eilat-Raichel joining us here today. Thanks so much for taking the time. Sorbet Cofounder and CEO. Look forward to checking back in the future as well.

VEETAHL EILAT-RAICHEL: Thank you so much for having me.