Are women more psychologically predisposed to getting into debt?

Momentum Financial Planner Janine Horn looks at debt, women, household financial wellness and where gender fits in.  

While the gap between men and women continues to close, as we move towards a more egalitarian society, we are still not quite there yet. The Momentum/Unisa 2020 Household Financial Wellness Insights report estimates that women in South Africa, on average, earn an estimated 30% less than men in similar jobs. But does the same divide exist for our willingness to take on debt? And, are women more psychologically predisposed to poor financial management?

PayProp, South Africa’s largest processor of residential letting transactions, recently released data showing how much South Africans spend on rent and debt repayments month on month. It turned out that men spend 47% of their income on debt while women spend 44%. This puts men and women on an equal footing, with groups being left with around 25% as disposable income.

A gathering instinct

To add to the discussion, Momentum Financial Planner Janine Horn explains what she believes can be stumbling blocks for some females when it comes to debt. “Our need to gather could be linked back to our primal instinct of taking care of the family by gathering. Many of us women tend to get hyped up in a shopping frenzy when there are instances like Black Friday. The more you buy, the more you save, right? Not necessarily – you could end up spending more.”

Horn’s advice is threefold:

  1. Understand your situation and what is happening to you
  2. Deal with it in a healthy way
  3. Declutter your life, your financial affairs and get rid of debt that is an unnecessary and costly burden.

Don’t let your finances take the backseat

“When it comes to financial matters, most women face unique circumstances and challenges that can lead to long-term financial planning and involvement in the detail of household finances tending to take a backseat,” says Horn. “For those in the fortunate position of having a job, there is a lot to juggle in day-to-day activities, such as work, children, groceries, and other household responsibilities.”

Moreover, according to the Household Financial Wellness Insights, women’s daily activities intensified during the lockdown. With women more at risk of losing their jobs or working lower-paid hours, many needed to take on more childcare and household responsibilities, as support options were limited by lockdown regulations, such as school closures, and the associated costs.

“In a patriarchal society such as in South Africa, many social and cultural restrictions are placed on women, including their household financial matters. But given that women tend to live longer than men (six years on average), in many cases outliving their partners, women need to become part of the long-term household financial planning process,” says Horn.

Horn says women must know where accounts or investments are held and be included as well as present during discussions with any adviser that their partners might have. “To understand the terminology that’s used to ‘talk-the-talk’, women should be bold and empower themselves with the financial knowledge to ‘walk the walk’ with self-confidence.”

When it comes to debt, Horn advises that both women and men need to remember that there is good debt and bad debt. If you borrow money to increase your ability to earn more money - that is not a bad investment. But if you are going into debt to pay off material things, you need to pay off that debt as soon as possible. Credit costs more than you think.

In order to secure your journey to success, Horn advises women and men alike remember Momentum’s seven financial habits of successful South African Households. These include:

  1. Map out your journey with measurable goals and a plan to achieve them
  2. Maintain your momentum by knowing where every cent goes
  3. Cover yourself for rainy days
  4. Make the bold choice to invest
  5. Don’t let speedbumps deter you
  6. Be financially savvy and streetwise
  7. Diversify your income sources

Learn more about these seven habits in the latest Momentum/Unisa Household Financial Wellness Index and catch the next episode of Geldhelde on 15 March at 19:30 on Via (DStv channel 147).

Janine Horn
Financial Adviser 
Momentum