Gender and Personal Debt – Another Gap
How the pay gap affects personal debt
Personal debt can affect anyone and it's on the rise. Could the pay gap and career start-up costs be having a greater impact on women? Are we bearing the brunt and being hit worse by stress? What signs can we look for in our loved ones?
The years following the financial crisis of 2008 saw a fall in the level of personal debt. But for the first time in many years authorities are expressing concern about a new spike in credit card usage, loan applications and a subsequent rise in personal debt. [Tweet "A growing number of people are faced with stagnant incomes and price increases."]
In the U.K. a report from the Money Advice Service says that up to 10% of the population have growing debt problems. Canada is reported to have the fast growing personal debt issues. [Tweet "In the US, women hold two-thirds of the student debt burden with a potential crisis in the wings."]
The pay gap
The debt inequity for women is exacerbated by the gender pay gap with a 26% differential reported, which becomes more exaggerated for women of colour and ethnic minorities. To kick-start careers, men and women may also take out additional loans such as car loans, rent down payments and even loans for a professional wardrobe. An increase in personal indebtedness leads to an increase in mental health issues, including depression and anxiety. Women during their career tend to accumulate less wealth than their male counter parts which results in lower pension provisions. Negative situations are compounded by career gaps, reduced promotion opportunities and an increase in divorce rates.
Although both men and women wind up in debt, women are more susceptible to stress from debt than their male peers. A 2014 study by the Financial Fitness Group surveyed over 75,000 employees in 400 organizations and found that women were 7% more stressed about money than men.
The UK Money advisory service is encouraging individuals to be on the look-out for signs that a friend or co-worker may be getting into unmanageable debt.
Watch out for these signs
Here are some signals:
• History of debt
• Living beyond their means - socialising, expensive clothes, gifts, trips and gadgets
• Cost cutting especially at the end if the moth - not going out, cutting out meals
• Taking out Pay Day loans – the interest rate on these short term loans is massive, sometimes 100% and should be avoided at all costs.
• They are exhibiting signs of stress. Moody irritable, weight gains, self-medicating, over or under eating.
It is imperative to seek advice to stop the situation spiraling out of control. [Tweet "There are many ways to consolidate short term debt with a longer term repayment plan."] This will involve making sustainable lifestyle changes. If women get into debt early in their careers the possibility to bridge the gap becomes more challenging in later years, unless significant adjustments are made.
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