How Financial Literacy Can Impact the Pay Gap

I see daily articles on the injustices of pay discrimination. The gender wage gap is real. Here are the facts:

With these glaring pay inequities, I’m disappointed when I see hardly any meaningful actions on closing the gap. We still aren’t teaching our young women that they need to negotiate their salary when they graduate. We still aren’t instructing them to start saving early. We still aren’t educating them on the best ways to build wealth over time.  

Witness the gender divide in college majors. In 2008 to 2009, the National Center for Education Statistics reported that for men earning a Bachelor’s degree, the top two programs were business administration and management (9.7 percent) and finance (3.3 percent), while the top two degrees for women were psychology (7.5 percent ) and business administration and management (7 percent). For women, finance didn’t even register in the top 10 disciplines.  

University of Maryland Tackles Financial Acumen for Women

The fact of the matter is that many young women will graduate from college without concrete exposure to the most basic principles of personal finance. Shockingly, few institutions recognize this as a gap in the curriculum. I found one school taking action to try to make a difference in women’s financial lives: The University of Maryland. Dr. Seung-kyung Kim and Dr. Julie Enszer launched a one-credit elective at UMD called Gender and Financial Well-Being. The course helps women develop greater financial acumen and encourages women’s critical engagement in finance and economics. In this class, women learn the importance of negotiating their salary at the onset of their post-graduation career. Students get pointers on how to conduct the negotiation. Women in the course also learn the importance of saving money early, plus, they even learn how to invest in the stock market via a semester-long portfolio management competition utilizing our program — TD Ameritrade U (TDAU) — to bring hands-on trading into the classroom.

Finance Doesn’t Have to Be Intimidating

The feedback from students who participated in the course (and TDAU) has been overwhelming — in a great way — but also very telling. At the start, most young women enrolled in the course admitted to being intimidated by all topics related to finance. One young woman noted, “We’re not afraid of the dark. We’re afraid of what we don’t know is there.” What they learned over the course of the semester is that the stock market really isn’t as intimidating as one might think. Most left the semester with a newly cultivated interest in capital markets.

Salary Negotiating 101 Should Be Non-Negotiable

Do you know what highly disturbs me? Most young women in the class didn’t realize that they should negotiate for higher compensation. Once they learned that this was customary for their male counterparts, several young women started negotiating for raises for their after-work jobs — and four women noted that they were granted raises. See? It works!

Teaching core financial literacy, like how to negotiate your salary, seems like a pretty basic way to move the needle for women NOW. Colleges and universities need to mandate financial acumen curriculum, which will ultimately help close the pay discrimination gap. However, until such sweeping measures are taken and everyone has access to personal finance courses, we need to motivate young women to seek out learning opportunities through other channels than college graduation requirements.  

Share This Message With Women in College

I challenge you to think of at least one young woman you care about who is enrolled in college right now. Maybe she’s your daughter, a niece, or a younger sister. Share this empowering message with her and encourage her to get together with a few of her friends to participate in the upcoming thinkorswim Challenge through TD Ameritrade U. It doesn’t matter if the students aren’t finance majors. The competition offers women the opportunity to learn about trading in a risk-free environment. Any fear of the stock market dissolves in this virtual trading competition that makes investing an attainable reality.  

Whether it’s through TD Ameritrade U or an increased involvement through university programs, it’s imperative we encourage early development of financial responsibility for women. Through increased financial education, women stand a better chance at closing the wage gap. Although pay equality may not happen in my lifetime, we can all work together to try to make a difference for today’s young women.   


Accept Nicole Sherrod’s challenge — share this post with a woman in college and push her to register for the thinkorswim Challenge through TD Ameritrade U.

TD Ameritrade, Inc., member FINRA/SIPC. Commentary provided for educational purposes only. Past performance of a security, strategy, or index is no guarantee of future results or investment success.

DailyWorth is separate from and not affiliated with TD Ameritrade.  


Nicole Sherrod is a member of the DailyWorth Connect program. Read more about the program here.