Personal debt levels are at an all-time high and women bear most of it. On the face value, this could be interpreted to mean that women are more empowered to access credit and using the borrowed money to advance themselves.
However, this is not the case. The loans are becoming more of a burden on the women and often hinder them from achieving personal financial goals. Many women already know the burden of debt, but their circumstances force them to borrow anyway.
Many of the reasons are gender specific thus the disparity between the number of men and women in debt.
Women need student loans more
Student loans best demonstrate the disparity between the number of men and women in debt. Women account for around 55 percent of college students so it is understandable that they owe a larger share of the student loan amount.
However, the difference is not proportionate because women account for more two-thirds of the amount. In a couple of years, the amount owed by women will cross the trillion-dollar mark while for men it will be just over $600 million.
So why do women own more student loans?
• More parents save and plan for their sons’ college education compare to those that save for their daughters
• It is harder for women to get part-time jobs to help them pay for their college education
• Even when the women get jobs, the jobs do not pay well enough to cover the expenses
More women proceed to graduate school
The courses that are more popular are often saturated and low paying for fresh graduates. To give themselves a comparative advantage, more women often enroll to graduate school soon after their undergraduate studies.
At this point, most of them are not financially stable and thus need to take more student or personal loans with the help of nation21loans. The situation is worse for those that had student loans undergraduate college because the loans mature while they are not yet in a position to repay.
The gender gap in earnings
The gender gap is no longer a myth. Research studies have been conducted to prove this and they have shown that women earn as much as 23% less than men. One of the explanations is that women often choose careers that are less paying but the gap exists even in the same types and categories of jobs.
As a result of the low remuneration rates, women often have to rely on loans to make ends meet. In addition, in an effort to minimize the impact of the loan on their lifestyle, they have to take loans with lower installment rates. This lengthens the loan repayment period and increases the gross amount to be repaid.
Women are less prepared for retirement
This can be directly attributed to the lower income rates among women. Since many women can’t comfortably fund their lifestyle using their salaries alone, they have to take loans that also take them long to repay.
As a result, even employed women seldom have surplus cash to start saving up for a retirement. Even those that manage to set up a retirement plan start saving much later than men on average.
Unfortunately, retirement plans are structured such that the more you save, the more benefits you get once you retire. Women, therefore, have less money during retirement thus need to take more loans to fill the deficit.
At retirement age, the women are also quite a credit risk so are often charged higher interest rates thereby worsening their financial status.
Raising a family is a tough job for two parents and much more demanding for single parents. The burden of single parenthood, unfortunately, affects disenfranchised women even more.
Over 8o percent of single-parent households in the United States are led by single mothers. Of these 30 percent live in poverty and more than half of them are responsible for more than one child.
The poverty in the single-parent households means that many of the mothers can’t afford daycare services. As such, if there is any emergency, the mother has to take time away from job further reducing her income.
To cater for their families financial needs, single mothers in such situations have to borrow money frequently. If the emergency is medical or other dire circumstances, the desperation pushes the mother to high-interest-rate lenders.
Such debts end up enslaving the family for a long-time past what is necessary.
Lack of keenness in handling debts
At personal level, almost everyone has some bad behavior when handling personal finances regardless of gender. There are, however, some bad behaviors that have been found to be more frequent among women.
For instance, when applying for a loan, women seldom compare lenders in search for cheaper rates. A woman is also more likely to accept the initial terms offered by the creditor instead of negotiating for better terms.
There are other tiny details about borrowing that women do not pay attention to and in many cases it is down to ignorance.
Fortunately, many women are recognizing their lack of financial knowledge. Currently, more women are seeking the services of financial advisors to help them manage their finances.
Women don’t invest frequently
Investing, if done smartly, is one of the surest ways to achieve financial stability.
Unfortunately, women consistently lag behind men in investing. While some blame may be apportioned to lack of capital, even women that have some source of money are more likely to keep their money in liquid cash rather than invest.
This does not mean that women don’t know to invest well. In fact, investments made by women are more likely to prosper because women carry out more research beforehand.
Rather, the lower investment rates among women are because they are averse to risk-taking.
By failing to invest, many women miss the chance to grow their income and achieve financial stability. The longer they take to become financially stable the longer they have to depend on debts.
As it becomes clear that women are suffering under the burden of debts they can’t pay, further research has shown that there isn’t one specific reason. The reasons women are more indebted than men are several. While many of them have small impact individually, their cumulative effect is overwhelming.
Some of the reasons are personal and the women can address them personally. Many others, however, are systematic and it will take a concerted effort from various stakeholders to help the women get off the yoke of debt.
By changing the financial situation of these women, the society will have changed the financial status of their households as well.