Women and Debt

Handling the household finances has stereotypically been a man's responsibility. In past generations men may have taken a more exclusive role in this area but times have definitely changed. Today more women than ever are participating in all aspects of the family's finances. However, this level of participation needs to increase. The reason for this need is two fold. First, many women have natural financial skills and talents that can be a valuable asset to a family. The second reason is that studies have shown that 80%, or more, of women will be solely responsible for the finances at some point in their life. If a woman is not prepared to handle this responsibility then there are inevitably negative consequences that follow. Examples of this may be: inadequate retirement savings, high levels of debt, or a failure to maintain healthy credit.

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The reason that so many women will become solely responsible for this duty is due to several factors. First of all, women on average have higher life expectancies than men. Another factor is the high percentages of divorce that now occur. And finally, many women today are choosing to remain single. Unfortunately, there are still many women who are not ready to meet this responsibility. The result is that 65% of women of retirement age have no pension (except for Social Security payments), and these women are twice as likely as men to live at or below the poverty line. (1) This statistics reflect inadequate levels of savings which can directly affect an increased use of credit and higher levels of debt. So how can women prepare themselves?

• Learn Now. Even if you are married and your husband handles the finances this is still the best time to learn. Find out where the important papers are filed and which accounts and investments are storing your funds.
• Gain Knowledge. Gaining a basic understanding of budgeting and investing can pay big dividends in the future.
• Practice your skills. Don’t wait for a catastrophe to use your new skills. Work out a system where you can put some of your skills to good practical use.
• Carry Proper levels of Insurance. Insurance money can obviously never replace the loss of a loved one. However, a proper level of coverage helps to cover debts and alleviate financial pressures if your spouse passes away.
• Create a financial plan. If you are single and have never created a budget, now is the time to do so. Now is also the perfect time to begin investing for the future.

At some point in time most women will be solely responsible for their finances. It is a wise decision to prepare for this in advance. Failure to do so can result in a diminished financial lifestyle, inadequate savings and higher debts.

1. http://www.pioneerthinking.com/junecleaver.html

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About the author:

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.