Why more women are in debt counselling

Debt counselling figures show that more women are in debt counselling than men.

Many would use this statistic to “prove”, that women spend too much on handbags and shoes and that women are “not good” with money.

However, what the debt counsellors tell us is that women come for financial help far sooner than men.

So if a man and woman were both in the same financial situation, the woman would be more likely to be in debt counselling. This also means that she is more likely to be financially rehabilitated than the man.

This raises the far more important issue that women remain financially more vulnerable than men, with 65% of men earning more than women, according to the 2009 Careers24 Salary Survey.

It is the role of women as mothers that makes us so financially vulnerable.

While figures are not available at this stage, anecdotally it would seem that many women in debt counselling are single mothers. Not only do they have the financial responsibility of raising their children, but they usually opt for lower paid jobs that provide more flexibility in order to raise their children.

Women are left significantly worse off after a divorce, mostly due to the fact that her future income is far more limited than her ex-husband’s, either because was limited when she took time off work to have children or simply because women do not earn as much as men.

Underfunded retirement
Probably the biggest financial threat facing women is an underfunded retirement. Although South Africans generally do not save enough for retirement, surveys show that women are significantly worse off in retirement than men. This is again mostly due to their role as caregivers.

When a woman has a child, she may take time off work and will often cash in her retirement fund to pay for maternity leave. Many women stay out of the workforce while their children are young. As a result, not only do they not progress in terms of salary increases, but during this time very few women put money away into retirement savings.

For those women who do re-enter the workforce they may select a part-time or flexi-time position. It is seldom that companies offer a retirement benefit with these types of positions.

An even greater problem is that women need to save more than men because they will live longer. The rule of thumb is that if you save 15% of your gross salary from the age of 25 you will have sufficient money to retire. For women that figures rises to 18%.

Fifty-four years after women marched on the Union Buildings to demonstrate against the pass laws, women have made significant strides in the workplace, yet our role as mothers, undoubtedly the most important role in society, continues to make us financially vulnerable.

Our challenge is to transform the workplace so that we can contribute our skills and experience while continuing to form the fabric of our society.

But the change starts at home. We need to start taking responsibility for our finances by sitting down and taking control:

  • Have a financial plan so we do not have to dip into our retirement fund when we have children

  • When we take time off work make sure we continue to contribute to a retirement fund

  • Insist that the company include us on their retirement fund and take the maximum contribution option

  • Fighting for a fair wage—surveys show the number one reason women are paid less is that they ask for less

  • Never just leave the finances up to our husbands. We need to know the state of our finances at all times

  • Have our own financial advisors

  • Make sure we have a balance between meeting our children’s needs today and our retirement needs in the future—what effect are those extra ballet/karate lessons having on our retirement?
  • Read more news, blogs, tips and Q&As in our Smart Money section. Post questions on the site for independent and researched information

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