The American Way

What does it mean to be a U.S. citizen? Understanding the American psyche.

Financial Status of Highly-Educated Early-Career Women

The financial status and well-being of highly-educated women

Over a series of 4 or 5 blog posts, I'll be discussing the topic of finances as a stressor in marriages. To lay the groundwork for these posts, this post describes several financial characteristics of a highly unique sample of more than 1200 women that I studied in 2008 (The Lifestyle Poll). To get a picture of the sample as a whole, here are some relevant demographic characteristics:

  •  The average age in the sample was 31 years old at the time of data collection (2008).
  •  Seventy three percent of the respondents self-identified as Caucasian/White, 11% as Asian, 5% Hispanic/Latina, 4% African-American/Black, 2% Indian, less than 1% as Native American, and the remaining 4-5% percent as of mixed ethnicity.
  • Ninety-eight percent are college graduates. The majority are graduates of highly competitive private universities. Sixty-two percent are graduates of one of the Ivy League Universities (Harvard, Columbia, Cornell, Dartmouth, Yale, University of Pennsylvania, Princeton, and Brown) and the majority of the remainder of the sample have been awarded degrees from other highly competitive universities (e.g. Stanford, Oxford University, the London School of Economics, Massachusetts Institute of Technology) and top state schools with rigorous admissions standards (UC, Berkeley, University of Florida).
  • Another noteworthy sample characteristic is that respondents were on average more highly educatedthan their fathers, men of a generation who were often expected to be highly-accomplished sole wage earners. That is, seventy-five percent of the Lifestyle Poll sample had graduate degrees or were in the process of completing an advanced degree (most often in law, medicine, or business), whereas slightly more than 60% of their fathers held advanced degrees.
  • Respondents were raised mostly in upper-middle (44%) and middle-class (37%) homes.


Now, with these demographic traits in mind, consider how respondents felt about their own financial health. First, respondents generally perceived themselves as upwardly mobile relative to their families of origin, as most (65%) felt that their financial situations were better than those of their mothers at the same age. An additional 15% felt that their financial positions were about the same, and the remaining 20% felt that their situations were worse than their mothers’ were at the same age.

Despite being too young to be anywhere near their full earning potential in most cases, in 2008, respondents reported extremely high household income levels relative to the population at large. The majority (about 80%) reported that they were able to afford their lifestyles without going into debt.

In terms of debt, most respondents (83%) had less than $5,000 in household credit card debt, and 70% had less than $1000 in personal credit card debt. Nearly half (45%) owned their homes. Note however that this data was collected in 2008, before the widespread financial collapse of the US economy and the current era of high unemployment and underemployment. This data does not speak to how respondents have weathered the changes in the global economy since 2008.

There is also some evidence that respondents are both financially knowledgeable and well engaged in the management of their finances. For example, most (72%) knew what the “S & P” refers to, and 59% reported that they could explain the difference between an IRA and a 401K without consulting outside sources. Respondents were investing in savings accounts (80%), 401K plans (64%), IRAs (55%), mutual funds (55%), stocks (43%), bonds (24%), and CDs (21%). The majority (70%) were actively investing in retirement accounts of some type. The majority (70%) also reported that they had financial buffers of at least three months in the case of some financial crisis such as a sudden layoff or loss of an income-earning spouse.

Within the married portion of the sample, working wives reported that they were making significant contributions to the financial health of their families. Half (50%) strongly agreed and another 17% somewhat agreed that their income was as vital to the well-being of their families as their husbands’ incomes.

More than half of the married respondents (54%) felt it was certain (22%) or probable (32%) that they could live as well as they did at the time of the survey if they were to lose their husbands to death or divorce. An additional 28% felt that this was possible but unlikely, and the remaining 18% felt that their standard of living would certainly decline if they were to lose their husbands.

The large majority of mothers in the Lifestyle Poll sample (82%) continued to work outside the home for an income. Most frequently, household bills were split 50/50 (44% of cases) or husbands paid for more of the expenses (39% of cases), yet for nearly one-fifth of the married sample (17% of cases), wives paid for more of the household expenses than their husbands. Married respondents perceived that they generally share responsibility equally with their husbands for managing the household finances and reported that they were slightly more likely than their husbands to submit payments for monthly bills.

Finally, in terms of the practical management of family income, slightly more than half (55%) had just one shared joint account, while the other 45% maintained separate accounts. One-third of the sample (33%) had a three-pot system—that is, both partners had their own accounts, and the couple had a joint spending account.  

Given this picture of financial health, how then do we make sense of respondents’ common perception that “lack of money” has been the biggest obstacle in attaining the lifestyle they would seek? Further, given the unprecedented financial parity in these marriages, how might we make sense of the report that frequent “arguments about finances” was the third most highly ranked marital problem? These intriguing findings will be the focus of August's blog post.


The American Way