Smith Professors Launch
New Study of Women and Money
Words of advice from the Smith Program for Women and
Financial Independence (WFI): “Life is long, plan your financial future now.”
To
help women with that planning, Mahnaz Mahdavi, WFI director and professor of economics,
and Sue J. M. Freeman, psychologist and professor of education and child study, will
be embarking on a new research study of women and money beyond the college years. The
survey will seek the opinions and experiences of Smith alumnae to provide insight into
women’s concerns about handling money and finances and
planning for retirement. This assessment of financial knowledge, behavior and attitudes will contribute
to programming that benefits Smith students and alumnae.
The need for financial literacy is paramount for women,
insist Mahdavi and Freeman, especially given women’s rapidly changing economic
roles in society and the family. To help Smith undergraduates become more financially
savvy, the Smith Program for Women and Financial Independence (WFI) was formally launched
in 2001.
According to Mahdavi, the program’s founding director,
WFI is believed to be the first comprehensive program of its kind for women in this
country. WFI has committed resources to improve women’s financial literacy by
providing students with the knowledge to tackle life’s financial decisions and
the experience to complement that knowledge.
Among WFI’s offerings are educational
programs that include weekly noncredit courses taught by Smith economics department
faculty as well as lectures by industry professionals covering a variety of topics
including entrepreneurship, socially responsible investing, philanthropy and identity
theft. Smith students also learn firsthand about investing through an entirely student-run
Investment Club that was initially endowed by a Smith alumna, class of 1931. In an
outreach program for the larger community, Smith students teach local high school students
and underprivileged teenage girls about credit, borrowing and personal finance. Mahdavi
points to student testimonials, such as the following, that underscore WFI’s
relevance: “One program in particular
that has shaped me into a stronger woman has been WFI.”
In recent decades women have gained
unprecedented economic power, Freeman notes, as reflected in the plethora of articles
in the popular press advising them about money. Recent census data shows that women
in their 20s working full time in the nation’s
largest urban areas now earn more than their male counterparts. Women also now outnumber
men as college graduates and in earning professional and advanced degrees.
Although
women are still rare at the top of the corporate hierarchy—accounting
for less than 12 percent of Fortune 500 CEOs—they have swelled the entrepreneurial
ranks. Thirty-eight percent of small business owners are women, and more than two-thirds
of all new businesses are initiated by women, says Freeman, the author of Managing
Lives: Corporate Women and Social Change.
In a span of 50 years, women’s roles
in the family have changed along with their economic clout. As Freeman and Mahdavi
point out, now a majority of mothers with children under 6 are gainfully employed full
time; only 14 percent of families have a male breadwinner and a female at home full
time. Furthermore, one-quarter of women in two-income households now earn more than
their husbands. Women serve as the primary household managers, making 80 percent of
all consumption decisions, as reflected in the amount of advertising aimed at women
today.
Women are making economic gains through legacy as well,
increasingly inheriting wealth from family and as widows.
“These gains notwithstanding, most of those living in poverty in this country are women and children,” write
Freeman and Mahdavi in a preliminary narrative. “Women are at significant financial risk when
their lives take a turn, through divorce or death of a spouse or partner, for example. Women over 65
are twice as likely as their male peers to be poor. A staggering statistic reveals that 75 percent
of the American elderly poor are women.
“Among the reasons for this disparity is that women
move in and out of the labor market more frequently and earn less than men over a working
lifetime. The combination of women’s lower earned
income and longer life spans makes their lesser contributions to retirement critical,” they
note.
As more companies abolish pension plans and workers are
obliged to fund and plan for their own retirements, knowing how to “self-direct” one’s investments
has become crucial, Mahdavi and Freeman say; yet as investors, women tend to be more
conservative and risk averse.
Mahdavi and Freeman
hope to extend and refine information gathered from WFI’s
2005 nationwide survey of college students that focused on acquisition and use of credit
cards. “The results reaffirm the need for financial education for college students,” they
report. “The results of the random survey of 700 students showed that women students
tend to carry larger amounts of credit card debt, pay credit card balances late and
are generally less knowledgeable about finance than their male counterparts.”
Smith
alumnae should watch for details, coming this fall via e-mail and snail mail, regarding
the upcoming online survey.
|
