Out of the 19 million credit active consumers in South Africa, 57% are women, according to Eighty20’s latest Credit Bureau Data released in 2021.
However, the same report reveals that 58% of loans in arrears are held by women.
Charnel Collins, the first female CEO of National Debt Advisors, gives her take on South African women and their current debt situation.
What makes women more susceptible to debt?
There are a number of factors that contribute to women being vulnerable to the debt trap.
According to Collins, these factors include:
– the differences in wages between men and women.
– a reduction in work hours and job losses
– retrenchments
– financial abuse. Some of the signs of financial abuse include taking out loans or opening accounts in a partner’s name, stopping a partner from working so that they are dependent on them, or forcing a partner to hand over their wages.
– women are the breadwinners in a single-parent household
How can women stop themselves from falling into the debt trap?
According to Collins, the best way to avoid the debt trap is for women to build up their savings.
"One of the leading causes of overwhelming debt among consumers is not having enough savings to handle unforeseen costs."
"It is advisable to have at least three or six months' worth of expenses saved up at any given point," Collins said.
Collins shares sure-fire ways to avoid the debt trap:
– refraining from using credit as much as possible
– stopping impulse spending
– looking for discounts and saving where you can
– pay down your credit cards
– create a monthly budget and stick to it.
How can women get rid of their debt?
Collins said that to start getting out of debt, women need to determine what they can spend on their debt repayments on a monthly basis.
According to Collins, women could either start with the debt with the highest interest rate or the smallest balance.
"The former will ensure that you actually spend less in total repayments and make your repayment journey become easier with time, while the latter will boost your morale as you would be able to celebrate your small wins quicker."
If women feel overwhelmed by their monthly debt obligations, they need to seek help.
Advice on how women can manage their finances and debt?
My advice to women would be to adopt healthier money habits by brushing up on their financial literacy.
“Most of us are not taught wise money management at home or at school. Therefore, the onus is on us to go out of our way to find the right experts to teach us these things,” Collins said.
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