05/18/2010 05:12 am ET Updated Nov 17, 2011

Closing the Female Financial Knowledge Gap

Every day, we make financial decisions that ultimately affect whether or not we will be able to live independently and retire comfortably. Do we opt for the Starbucks Caramel Latte or the Dunkin' Donuts regular coffee? Do we hop on the subway or hail a taxi for the morning commute? Do we negotiate with our landlord to lower the rent or do we avoid the conflict? Do we splurge on the Fendi bag we saw in the window shop or pay our credit card bill on time?

We may opt for Starbucks or a taxi, but the decisions we make on a day-to-day basis can negatively impact our spending, our savings, our debt and, ultimately, our long-term financial health. But, how can we navigate through these financial decisions and plan wisely for the future if we have never been taught about personal finance in school?

The majority of young Americans are not as savvy about their financial decisions as they should be. This gap in knowledge inspired me to start LearnVest, a personal finance resource for women. As I was preparing to graduate from college, I heading off to a job at a bank... but I had never been taught a thing about personal finance.

Many high school and college students do not know how to balance a checkbook, invest in long-term stocks and bonds, or plan for retirement. They know that "credit debt" is a huge concern but don't have the tools to avoid it.

This lack of empowerment doesn't end in adulthood. Studies show that women feel particularly insecure about managing their money: 99% of women couldn't give themselves an "A" in personal finance, 67% of single women do not have a retirement account, and 70% of women say they are carrying so much debt that it is making their life unhappy. On average, Americans under 35 years old spend 16% more than they earn. The average credit card debt for a college senior with at least one card is $4,138, up from $2,169 in 2004. This is addition to student loan debt. But how are young people, women, or anyone for that matter, expected to make the right decisions and plan for the future without a proper education in the fundamentals of personal finance? It's time our school system gives them the knowledge they need to use it.

Just as reading, arithmetic, and writing are integral parts of one's education, personal finance should be, too. Most Americans recognize the need for personal finance education in the American school system. A poll on the subject revealed that 90% of respondents believe that personal finance should be incorporated into every child's education. This notion is gaining traction. Forty states have begun to offer some form of financial-literacy instruction or set personal finance standards in elementary and high school classes. Missouri, Utah and Tennessee now require a financial literacy program as a requisite for high-school graduation.

Despite these efforts, states have failed to make the necessary monetary investments for real change. As a result, we have a long way to go in regard to personal finance education. While some students in grades K-12 are starting to learn about the value of cash, savings, money management and investing, the majority of high school and college curricula fail to offer personal finance courses. Many students graduate financially illiterate and unaware of the implications; they know their team's latest football score better than their credit score.

For women and personal finance, financial literacy is the first step to ensuring financial independence. It is crucial that women understand money management and long-term financial planning early on, so that they can make the right financial decisions at different stages in life. 90% of women will be responsible for their own finances at some point in their lives. Plus, women account for 80% of all spending by U.S. households.

The decisions that women have to make are not just whether or not to go to Starbucks in the morning, but how to pay down college loans, how to plan for a wedding, marriage or kids, and how to approach retirement planning.

With every stage in life, there are new choices that people must face. Once married, we must decide whether or not to combine our checking accounts with our spouse's. We need to figure out the right time to start saving for a baby, and then when to save for that child's future college expenses. We need to understand the changes in insurance that come with having a family.

According to an Allianz Insurance survey, women reported that knowledge, not time, was the greatest barrier to co-managing their household finances. Laura Carroll, a LearnVest supporter, recently commented, "As part of early education, students should not only get the basics on managing one's money, but also be exposed to the idea of co-handling the finances as part of a successful marriage." I couldn't agree more. If we can bring personal finance to the classroom and educate our youth on money management, savings, and long-term investing, then future generations will be more frugal in their spending, wiser with their long-term planning, and more financially independent.