With women earning an estimated 30% less than men, the gender pay gap significantly worsens financial burdens for women. As we observe International Women’s Month, Head of National Debt Advisors Sebastien Alexanderson highlights the vicious debt cycle that arises as a result.

7 March 2024: While the negative effects on women, especially those from working-class backgrounds, are significant and multifaceted, the scourge of the gender pay gap continues to affect many women with Statistics South Africa confirming a roughly 30% pay gap across industries.

Unpacking this issue during International Women’s Month Head of National Debt Advisors, Sebastien Alexanderson, said the implications of the gender pay gap are far-reaching.

He said that the February 2024 report from National Debt Advisors shows a 1% rise in single female consumers looking for debt assistance, now making up 37% of their clients. Notably, only a few have secured debts like vehicle finance (2.7%) and home loans (0.8%), while a major portion, 52.2%, face unsecured debts, including payday loans, medical bills, and loan shark debts, with some handling up to 30 different unsecured accounts.

"Women are taking on the brunt of managing debt, often using loans to make up for the smaller salary they receive compared to men. Unfortunately, this can trap them in a cycle of taking on more debt than they can handle," said Alexanderson.

With nearly 38% of South African households headed by women, with about 6.1 million homes primarily financially supported by women, Alexanderson noted that the South African situation was further complicated by a growing phenomenon of female breadwinners.

"The unfortunate reality is that many women end up being the main earners not by choice, but because of their circumstances," Alexanderson notes, referring to a Unisa study that shows both the strength and struggles of female breadwinners in South Africa.

He said in this scenario, the reality for many women is that they are not only unable to save, but they also have to borrow more money for emergencies or even daily expenses, making it tough to get out of debt.

"The gender pay gap plays a big part in why women have more debt. Because women earn less, they have less money left over after paying for essentials. This can lead to a cycle of debt that's hard to break free from,” said Alexanderson.

To help women manage debt better and address the pay gap, Alexanderson shares some practical tips:

• Plan Ahead with Budgeting: Looking three to six months ahead can help you manage big expenses without falling back on debt.
• Be a Savvy Shopper: Taking advantage of sales and buying in bulk can make a big difference in your financial health.
• Focus on Debt Management: Making debt repayment a priority can open up your budget for savings and investing, leading to greater financial freedom.
• Educate Yourself Financially: Taking time to learn about personal finance can empower you to make smarter decisions, boosting your financial knowledge.
• Grow Your Wealth: Understanding and improving your net worth, setting financial goals, and keeping separate savings accounts for autonomy within relationships are key steps to building a secure financial future.