A new report released Wednesday (April 15) says women living in rural parts of Arkansas are struggling with more economic insecurity and a lack of financial literacy compared to those in metropolitan areas. It also calls on financial institutions to do a better job of addressing the situation.
Titled “You Learn as You Go: Economic Risk & Reality for Women in Rural Arkansas,” the report was commissioned by the nonprofit Women’s Foundation of Arkansas and Stone Bank. Its conclusions were based on survey responses from more than 800 women across the state and in-depth conversations with more than 100 participants.
“When you listen closely across communities, generations and across the state you begin to hear patterns, ” Women’s Foundation of Arkansas CEO Anna Beth Gorman said Wednesday while presenting the report. “What they’ve been telling us is now backed by data.”
Among the findings:
- 92% of women manage their household finances either with a partner or entirely on their own, but few describe themselves as “very confident” in their financial decision-making.
- Child care costs are a critical barrier to employment and maternal leave is inadequate.
- Women’s entrepreneurial potential is constrained by gender bias, limited access to capital, caregiving burdens and lack of networks.
- Rural women are more likely than those in metro areas to say they do not know how they would cover an unexpected $400 expense.
“Rural communities don’t hide the gaps, they reveal them. What might be buffered or masked in a more resourced area is often fully visible and fully felt in our rural communities,” Gorman said. “Access to financial institutions, access to information, critical capital for a loan — when those systems aren’t working, you see it more clearly. And because of that, rural communities give us one of the most honest pictures of how women are actually navigating financial decisions today.”
The report says rural women are more likely to learn how to manage their finances through mistakes rather than through formal financial education programs. Fees for things like overdrawing a bank account, failing to pay bills on time or confusion over taxes can create a cycle that is hard to get out of and can lead to accounts being involuntarily closed. Then a distrust of banks can develop, along with the perception that banking services always come at a high cost.
“It’s about managing risk,” Gorman said. “When you are learning in real time with real consequences and fear, confidence does not come easily.”
She said banks need to do a better job in reaching out to that customer base and understanding their needs and their concerns and addressing them.
Stone Bank President and CEO Nick Roach called the findings of the report “alarming” and said his bank is already in discussions about possible actions it can take.
“It just puts the reality that life is different in rural Arkansas specifically compared to our metro areas,” he said. “The study was one step, now what are we going to do about it? We really need to close the financial education gap across Arkansas and we very much invite our partner banks and financial institutions to join us in that effort.”
Gorman said in an interview after the event that modern technology with more people using online banking has exacerbated the problem by creating a further disconnect between people and banks.
“You’re not talking to a person if you’re using your phone for your banking,” she said. “How do you build relationships? Social capital is the way to unlock financial capital and you get social capital by building relationships and building trust. And this was probably the largest takeaway of this report.”
Its release comes at an important time as Gorman says the U.S. is in the middle of one of the largest economic shifts in our lifetime. An estimated $84 trillion will transfer from one generation to the next in the coming decades, she said, and “women are going to be at the center of that shift through inheritance, through longevity and through the financial decisions they are already making every day.”
Federal Reserve Bank of St. Louis Principal Supervision Outreach Consultant Summer DuMond spoke about growing up in a very low income household in Pottsville, Ark. She said friends and family there are still going through the same moments of survival and risk management.
“It’s really truly because they’re having to go through some of their resources on — it’s not how can we invest in something — it’s just how are we making those decisions to survive to the next thing,” DuMond said. “Even if we’ve saved a little bit here, the tire’s gonna blow out or something’s gonna happen along the way and those resources just aren’t always there for them.”
She said there are many opportunities in the findings of the report that can help community bankers understand the perspectives of the people that they serve and better engage with potential customers.
The report also says child care access, workplace flexibility and paid family leave are also problems for rural women and need to be considered not as “women’s issues,” but part of workforce and economic development.
The full report can be read here.