Here at Vested, clients come first and we’ve spent the first two weeks of Financial Literacy Month helping push our clients’ initiatives forward, even neglecting our own efforts. Classic case of the shoemaker’s kids not having shoes… But there’s a reason each and every one of us opts to work at Vested. We are unabashedly nerdy about finance, see its value in our communities, see its potential for affecting change. Financial literacy is a huge part of that, and this month is kind of a big deal here.
I don’t have a financial background, though there were signs, and the fact that I now work in finance feels like anything but an accident. I first fell in love with finance thanks to a book about wealth management. The way it was written was so accessible that I finally felt like someone had lifted the veil on this mystery topic. I started consuming information voraciously. I found online communities — reddit and financial bloggers. I found programs like LearnVest. What I didn’t find? Female friends who shared this interest.
Financial Literacy and Women
After further digging, I realized how impactful the gender gap is when it comes to financial literacy. Women lag far behind their male peers when it comes to financial literacy. Women pay the pink tax on comparable items and are subjected to sexist ideals of beauty and self-care that compel us to spend even more (i.e., few men buy feminine hygiene products or makeup, and they aren’t expected to show variety in their look and clothes). Compounding this problem, women make less than their male colleagues (meaning even if they save at the same rates, they’re saving less), are more likely to take a career gap (which ultimately hurts their career trajectory and, yup, savings rates), and do more of the unpaid work at home (meaning less time for side hustles). By retirement time, women have less saved than men yet have longer life expectancy. There are a lot of headwinds, and we can’t fight the #financialpartriarchy without knowing that it exists. That starts with literacy.
If it’s not readily apparent, this is a real passion point for me, and I know I’m not alone. So I reached out to my colleagues and asked them to share some thoughts on the value of financial literacy — what it means for them on a personal level, or trends they’re seeing in the space. Below are their responses.
Financial Literacy and Access
Senior Account Executive Seres Lu
We’re seeing something like a virtuous circle – consumer fintech, especially budgeting and investing apps, are lowering the threshold for Americans – young and old – to more easily engage with their money. As they do, they’re better understanding their finances and increasing their own financial literacy. This in turn inspires them to go deeper, to try out financial services that they might not have considered before. Access underlies both financial literacy and financial inclusion, and increasing access for more people can only be a positive thing.
Financial Literacy and Mental Health
UK Account Executive Sofia Romano
It is a known fact that those in lower-income households are vulnerable to suffering poor mental and physical health. Detriment to the former is particularly prevalent, as financial distress is one of the main causes of anxiety and depression. Whilst this is largely to do with poverty and the injustice of global economics, there is a strong correlation between mental health and financial literacy – which, incidentally, is also heavily entwined with poverty.
This vicious cycle of poverty and poor health needs to be tackled from many angles. For financial literacy and mental health, one major area for improvement is that we need better education to improve financial knowhow, starting from an early stage in life. This applies to everyone, but even more so for those in deprived areas and for those in, or highly susceptible to, mental health crises. Good financial education is key; providing individuals with the means to make responsible financial decisions, whilst in turn helping to reduce the epidemic of poor mental health.
Financial Literacy and Parenting
UK Director Katie Spreadbury
As a parent, teaching financial literacy seems like a BIG responsibility. My three-year-old already knows that paper money is better than coins, and that pounds and pence are different (yep, I’m new to the London-based Vested team). But I can see ahead the challenges of teaching the value of money, how it’s connected to hard work and then as my two daughters grow up how to manage more grown up finances like mortgages and investments. Here’s hoping I can pass on my knowledge of financial services and give them a head start.
Financial Literacy and Education
Graduate Associate Ashley Shahid
Financial education is so important for the development of financial literacy in the United States that there is a treasury commission dedicated to the advancement of financial understanding: The Financial Education and Literacy Commission (FLEC). The correlation between financial literacy and education is a complex one, one in which the disparity between the educated and non-educated is apparent. In 2003, Congress passed the Fair and Accurate Credit Transactions Act which established FLEC and tasked it with the launch of a national financial education website, MyMoney.gov. The goal of MyMoney.gov is to strengthen financial ability and increase accessibility to financial services for all Americans. As a result of FLEC’s partnerships with secondary schools as well as with government offices such as the Office of Federal Student Aid, the Commission has provided financial education materials and programs to millions of Americans nationwide to aid them in financial decision making and achieve economic security.