Hallie Davis

In Factors Contributing to Financial Well-Being among Black and Hispanic Women, from the Summer 2021 issue of The Journal of Retirement, authors Robert Clark (of North Carolina State University), Annamaria Lusardi (of George Washington University), Olivia S. Mitchell (of the University of Pennsylvania), and Hallie Davis (of George Washington University) analyze data on women’s self-reported financial well-being (FWB), plus objective data on their financial circumstances. They find that Black and Hispanic women are more likely to have lower income, to be single, and to have dependent children. Researchers associate these factors with lower FWB—but surprisingly, Black and Hispanic women report slightly higher average FWB than White women. This may stem from factors like culture and family structure. Black and Hispanic women may have a greater sense of financial well-being because they expect their extended family or grown children to support them after a job loss or during retirement. White women, however, experience greater FWB when they become financially literate. The authors conclude that a one-size-fits-all approach to financial education does not work for women. Financial advisors can help their female clients with targeted education tailored to their identified needs.

This article provides an in-depth examination of the financial well-being of Black and Hispanic women and the factors contributing to that well-being, using the 2018 survey wave of the National Financial Capability Study. The article documents meaningful differences between Black and Hispanic women versus White women; the former are more likely to face economic challenges that depress financial well-being. Controlling for differences in sociodemographic characteristics, important dissimilarities distinguish the factors that contribute to financial well-being for Black and Hispanic women compared to White women—including the distinct impacts of education, family structure, employment, and financial literacy. The results imply that extant financial education programs inadequately address the needs of Black and Hispanic women. TOPICS:Wealth management, legal/regulatory/public policy Key Findings ▪ We explore the factors shaping financial well-being with a special focus on Black and Hispanic women between the ages of 22 and 60, in the 2018 National Financial Capability Study. ▪ Differences in demographic factors contribute to FWB across race and ethnicity, including education, family structure, employment, and financial literacy, provide insight into why subjective FWB scores do not appear to differ across race and ethnicity, despite objective measures, such as borrowing behavior, indicating strong differences. ▪ Our findings lead us to conclude that a “one size fits all” approach is unlikely to address differences in financial well-being across the board and, in particular across sub-groups of women.