Covid-19 has left women trapped in debt

the herald

Women make up 57% of South Africa’s 19 million active credit consumers. This is according to the latest data from Eighty20’s credit bureau released in 2021. The same report found that 58% of delinquent loans are held by women. Globally, millions of people have re-examined their spending and started investing in long-term financial goals in the wake of the pandemic.

Speaking in light of Women’s Month, Charnel Collins, CEO of debt advisory firm National Debt Advisors (NDA), “While no one has been immune to the financial devastation caused by the pandemic, women have been particularly hard hit financially in the months following the initial lockdown, adding that this could be the result of reduced working hours, job losses or layoffs.

According to Collins, as women, these and other factors are among the leading causes of crushing debt and financial devastation, despite deep-seated societal issues such as gender inequality that have been exacerbated during the pandemic. NDA’s customer base also reveals that more male customers said they had returned to pre-Covid working hours than women.

As we live in post-modern times, 60 years after the International Labor Organization (ILO) introduced equal pay and non-discriminatory employment practices, South Africa and the world in general still have inherent gender pay gaps. South Africa, in particular, has various pieces of legislation aimed at preventing gender discrimination in the workplace.

Yet the country has a median gender pay gap that stagnates between 23% and 35%, with the average global gap currently standing at around 20%, according to the ILO. Thus, wage differences between men and women are a determining factor in women’s over-indebtedness. “Whether it’s the gender pay gap, maternal involvement or financial exploitation, women are more likely to be in debt for a number of reasons,” Collins said.

Another major cause of over-indebtedness among women is financial abuse which is part of the general scourge of domestic violence in this country. Although not as physically visible as the violent nature of domestic violence, financial violence is still the lived experience of many South African women. “Some identifiable signs of financial abuse include abusers taking out loans or opening accounts in their partners’ names, forcing their partners to stop working so that they are dependent on them, forcing their partners to hand over their wages or continually rely on the partner to meet the financial responsibilities of the household even when they are also earning a living.

Collins says that last layer also conjures up the notion of women only raising children, which in itself is a huge financial burden. According to the Human Sciences Research Council (HSRC) and the South African Race Relations Institute (SARRI), the fact is that the majority of single-parent households are headed by women. Research indicates that over 40% of South African mothers are single parents and in the current economic climate it is no surprise that 51% of single mothers in South Africa are unable to afford household expenses easily.

The situation may be truly grim, but women can take steps to navigate and overcome their financial hurdles. Collins offers the following tips to help women become more financially secure:

Be sure to set yourself financial goals. Identifying specific, focused goals today can help you become financially stable in the future. Whether it’s planning a vacation, making a down payment on a mortgage, or saving for your child’s college education, always set short-term and long-term goals. By putting a timeline on each goal, you can move forward and save money in small amounts.

Keep track of your finances. Having a thorough understanding of your finances is beneficial. Make sure you know how much money is coming in and going out by reviewing your accounts daily or weekly. By doing so, you will also be able to familiarize yourself with your spending habits, creditors and bank account balances. Tracking your finances helps you make sure your money is safe, your payments are clear, and your bills are paid on time.

Create a savings account that you cannot easily access. In general, having an emergency fund of three to six months of living expenses is recommended, but in reality, you should save what you can. With just R100 a week set aside in a savings account, you will become more financially independent. The extra money in the bank can help you get through an otherwise tough time and give you peace of mind that you have a safety net in place.

Reduce your debt. Debt isn’t always bad, like a security on your home loan, but other types should be minimized as soon as possible. Even if it means paying an extra 20 rands a month on your credit card balance, pay off your high-interest debt. Every amount above the minimum payout helps.

Invest in your future. While making sure you can cover unexpected expenses and events, setting aside money to cover life, disability and creditor insurance is also part of planning for the future. If you become incapacitated or need to transfer your assets and money, having an estate plan in place will help simplify the process of deciding who will benefit from your estate.

“While obstacles will always exist, you should find ways to protect yourself and ensure your financial well-being in the future. Financial security can be achieved by knowing your finances, having savings, setting goals, building credit, and minimizing high-interest debt,” Collins concludes.- Moneyweb

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John A. Bogar