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Why do women have more debt?


29th Mar 2021 Managing your Money

Why do women have more debt?

Emma Bitz co-founder of Europe's leading financial educator made by women, for women, Female Invest, explains why women are often more likely to be holding on to debt

In the UK, women are more likely to struggle with debt than men. In fact, according to the recent research conducted by the Women’s Budget Group—an independent network of academics and policy experts who are campaigning for a more gender-equal economy—women are more likely to struggle with debt, more likely to be deemed insolvent, and more likely to rely on loans to meet the everyday cost of living.

Debt is detrimental to a person’s overall wellbeing; so, in order to break this cycle, it makes sense to first better understand why women are more likely to fall into debt. Crucially, it is important to understand that the reasons are not rooted in spending habits or a lack of financial literacy. Rather, there are a number of societal factors at play.


Gender bias

woman looking at online bankin

Being paid less than men, on average, means that women are both vulnerable when it comes to falling into debt (as they are at a financial disadvantage) and end up with debt for longer (as they lack the means to pay debt off in an efficient way).

The combination of lower pay and more time spent paying off loans, which incurs more interest, is a recipe for long-term debt. For example, the UK government has found that women take 16 years on average to pay off student loan debt, as opposed to the 11 years it takes men to pay off the same loans.


Relationship dynamics

a couple on their wedding day

Research has shown that when women enter a relationship, they increasingly let their male partners take charge of the important household finances whilst they themselves focus on day-to-day expenses.

The financial decisions that are often deferred to men in heteronormative relationships include larger decisions such as investment, planning, and even down payments on real estate. The problem here is that these are the big money-makers.

As a result, if a man and a woman separate, the man leaves the relationship with more assets than a woman would, and this, in turn, can lead to debt.



black and white photo of a family

One big issue that impacts women and their likelihood to fall into debt is childcare. Research by the Nuffield Foundation has shown that women are far more likely to leave work or reduce their working hours after the birth of a child. This can be especially damaging to the finances of single-parent families.

On top of this, the campaign group Pregnant Then Screwed found that 35% of women who return to work after having a child barely break even when it comes to covering the cost of childcare, a precarious situation which can sometimes lead to debt.


Everyday necessities

woman shopping

A recent analysis by the independent bank Monzo found that women’s products are often significantly more expensive than men’s: on average they were found to be 13% more expensive. Some products, like moisturisers, have been found to be up to 34% more expensive. This also applies to things like clothing, haircuts, and other essential items.

Whilst these differences might not directly lead to debt, it does mean that the cost of living as a woman is higher, and it can make it difficult to stay on top of finances when you’re earning less than men but spending more than them.


What can we do to change things?

woman on computer

In order to learn how to change things, we need to take control, and a step in the right direction for women everywhere would be taking charge of their finances in whatever way they can.

At Female Invest, we always advise our members to look at their personal finances from a 360 degrees point of view and to plan for the future. This includes things like making a budget, trying to save where possible for a rainy day or a difficult situation, negotiating up your salary, or having financial talks with your partner to make sure you’re both on the same page and both benefiting from the financial side of your relationship. Once you start taking an active role in your financial future, understanding and improving other areas of your personal finances becomes easier.

Women still have a long way to go when it comes to gender parity, and we are not fighting on an even playing field. Still, that doesn’t mean the battle for more positive financial futures has been lost. By increasing our awareness of these issues, educating ourselves and becoming more financially literate, and empowering ourselves to take more control of our financial futures, we can start to balance out these differences whilst balancing our books at the same time.

If you would like to find out more about how to manage your finances, make investments, and have more agency in your financial life, consider visiting femaleinvest.com

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