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Women and debt

Which factors can put women at risk of financial difficulties?

Looking at the life events and other factors that can put women at more risk than men from experiencing problem debt.

Coming soon: Look out for our focus on men and debt and articles about how debt affects different age groups across society.

More women than men contact us for help with their debts

Our latest statistics show that over 60% of our new clients are female. 

That doesn’t necessarily mean more women than men in the UK need help with their debts. It could be that more women are contacting us because they’re more open than men in admitting they need help. 

Could it also be that women feel less secure about money? YouGov polling commissioned by us revealed that more men (36%) than women (28%) started 2018 feeling confident about the state of their finances.

Some key statistics

  • Women owe less money - but they’re more likely to have problems with debt than men
  • Women are more likely than men to have savings accounts, but their savings are worth less on average

Source: The Fawcett Socity

  • Over a quarter (26%) of our new female clients aged under 25 in 2018 had high cost short term credit. This was lower than among men of a similar age (35%).

Our research and reports

The gender pay gap

The Office for National Statistics’ Annual Survey of Hours and Earnings (ASHE) latest annual survey (2018) shows that female full-time workers earn 13.7% less than male colleagues in the same or equivalent roles.

Furthermore, the Trade Union Congress (TUC) have concluded that women are generally more likely than men to be in low paid work.

A low income doesn’t automatically put you at risk of being in debt, but a higher salary can offer more opportunities to save and build up an all-important safety net.

Also, when you have more money coming in each month you may be better equipped to overcome short-term financial problems or ‘income shocks’.

Low earners may have no option other than to take out further credit or high interest, short term loans to deal with income shocks. As these repayments build up, the situation can get worse in the long term.


Employment gaps

Women are more likely to have gaps in their employment or work part-time hours than men are. This is often because they take time off to raise families or are caring for other family members.

Being out of work is a key debt trigger for needing debt advice: Unemployment/redundancy was the most common reason given for contacting us in 2018. Read our Statistics Mid-Year Update

From our latest statistics, 19% of our clients are part-time workers and 32% are unemployed.

While the government’s unable to share data on the amount of time mothers and fathers take time off work after their child has been born, it would appear that women are still more likely to have career breaks. 

The relatively new ‘shared parental leave system’, which allows couples to share their pay more equally, has had a low take-up. There’s more information in this article from the Guardian.

Women are also more likely than men to:

  •  Act as carers for family members, meaning they need to work flexible hours, or they aren’t able to work at all
  •  Have jobs with less long-term security, such as zero hours contracts, leaving them at risk.

The cost of being a single parent

It's estimated that around 90% of single parents are women. (Source: Gingerbread).

22% of our clients are single parents, and the majority are women. According to the Office for National Statistics, only 6% of the UK population are single parents.

Separation causes a huge financial strain for everyone. It can be especially expensive when children are involved, as the family needs to find the money to support two households instead of one.

Following the separation, financial arrangements need to be finalised, child maintenance agreed to and benefit entitlements may need to be adjusted. This doesn’t always go smoothly or quickly.

In the meantime, the parent living with the children still needs to buy clothes, heat the home and pay for other daily household essentials. And to do this, they may depend on credit and short term loans to get by.

According to research by the Fawcett Society lone mothers have been identified as the group most likely to struggle with debt.

This is because they:

  •  typically have low levels of savings, and
  •  are much more likely to be in arrears on bills or credit repayments.

And Gingerbread’s study into single parents and debt found that:

  •  The majority of single parents don’t receive child maintenance payments
  •  Nearly half of children in single parent families live in relative poverty. That’s around twice the risk of relative poverty faced by children in two parent families
  •  The lack of jobs that offer flexible working can mean single parents get stuck in part-time work. This work is often low-paid to balance and family life

Gingerbread: Single Parent Statistics


The squeeze on benefits and welfare spending

The Equality and Human Rights Commission’s 2017 report on welfare reforms said there had been a “significantly adverse” impact on many women. 

Overall, women have lost around £940 per year on average, compared with losses of around £460 for men. This is because women receive a much larger proportion of benefits and tax credits.

These differences are particularly marked for women aged between 25 and 44, reflecting that child support is usually paid to the mother (when both parents are in the household) and that lone parents are usually women.


State pension reductions and changes in eligibility

In 2010 the government took the decision to assess pension payments using the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI). RPI generally runs at about 1 percentage point higher than CPI. Most state pension claimants are women.

Therefore, more women than men across the UK have experienced what amounts to a real-term cut in their pension when annual increases were reduced by the move to CPI.

Further to this, a specific group of women have been dealt a significant blow due to pension reforms introduced with the intention of being fairer to both genders. It was ruled that women who were born in the 1950s were no longer able to get the state pension at 60 and instead had to wait until they were 67.

This change has affected 3.8 million women. It has been argued the change came too late for these women to budget effectively in time for their impending retirement, leading many to experience financial difficulties.


Financial abuse

Men can also be victims of domestic violence, but the overwhelming evidence points to this being an issue that affects many more women than men. In recent years there has been increased focus on ‘financial abuse’.

Financial abuse involves women’s control of their own finances being taken away from them and, in some cases, fraud or theft being committed.

In partnership with the Co-operative Bank, the charity Refuge conducted their ‘Money Matters’ study of women living in their network of shelters. The comprehensive report, published in December 2015 revealed patterns of abusive behaviour.

They found that abusers:

  •  Made their partners stop work so they were dependent on them
  •  Forced their partners to hand over wages to them
  •  Put the household bills in their partners’ names, so they would liable to pay them, and any debts that accrued as a result
  •  Forced their partners to put child benefit in their name
  •  Taken out loans in their partners’ names, either by force, or without their knowledge

If you or anyone you care about, is in this situation, contact one of the specialist charities who help people in these situations.

National Domestic Violence Helpline (NDVH)

Refuge

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“I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me.” (Leslie, Essex)

Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

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© StepChange Debt Charity 2019