A woman sitting on a mountain top bench.


Wives Learn Finances as Husbands Age

A 29-year-old Ph.D. candidate is challenging the belief that elderly women don’t prepare to take over the household finances after their husbands die and leave the task to them.

The stereotype about older women probably springs from pervasive evidence that women generally have lower levels of financial literacy than men.

But Joanne Hsu at the University of Michigan found that women prepare for the high likelihood that their husbands will die first by beginning to acquire financial knowledge.  Some 80 percent of the women in her sample are on track to catch up with their husband’s level of financial knowledge.  Her study controlled for low cognition, so her findings measure the wife’s improvements that are above and beyond her husband’s.

The prospect of widowhood “provides an incentive for women to accumulate financial literacy,” Hsu concluded in “Aging and Strategic Learning: The Impact of Spousal Incentives on Financial Literacy.”  Since women know that financial knowledge “cannot be acquired instantaneously,” the learning process starts before the husband dies, she wrote.

Hsu spends more time describing her economic models than discussing how this plays out.  But it’s easy to imagine the scenario in my parents’ marriage.  My father died in 2004, but my mother – if her genes come through – could live to be in her mid- to late-90s.  When he became terminally ill with cancer, my mother took more interest in their finances.  It wasn’t a smooth process, but once engaged, her learning continued.

It’s comforting that women show resilience and respond to the pressing need to get up to speed on the household finances.  The bad news is that financial literacy is low among all Americans – men and women.  If a husband’s grasp of the couple’s finances is inadequate, a wife who catches up to him still may not be well-prepared to go it alone.

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