The Truth About Women and Debt

Economic instability and a lack of maternity leave are compounding women's already heavy student debt burden. Here's what we can do to create a level debt playing field.

In media and popular culture, women are often pegged as the household shopaholic—buying shoes, clothes, and other luxuries that stretch family budgets. But while it's true that women do drive the majority of consumer spending in the household, the reality is they're not shopping just for fun; they're carrying the mental and financial load of making sure the home and family run smoothly, whether that's buying the kids' school supplies or a replacement toaster when the old one is on the fritz.

In fact, research has shown that women's relationship with debt isn't about frivolous spending at all. Instead, economic uncertainty brought on by the pandemic and a lack of universal maternal leave are compounding women's already heavy student debt burden. We spoke with money Coach Nika Booth from DebtFree Gonna Be about the realities of gender and debt—plus what we can all do today to create a level debt playing field for women and girls.

Personal debt is a feminist issue.

The debt burden in the U.S. falls disproportionately on women's shoulders, thanks to a number of factors beyond their control—from the gender pay gap and unpaid family leave to their disproportionate student debt balances. A report by the Education Data Initiative found that women are more likely to have high student debt balances and large monthly student loan payments—even though they make 26 percent less than their male counterparts. And despite the larger payments, women often take two years longer to pay off their loans.

Paid leave and child care are critical infrastructure.

Since the beginning of the pandemic, women have lost jobs or left the workforce at a higher rate than men, with job losses especially pronounced among women with a high school education and young mothers, according to a report by the Pew Research Center. In the United States, according to the American Association of University Women, "Many women cannot return to the workforce without holistically addressing the economic needs of families."

The AAUW has found that "over half of mothers who left their jobs during the pandemic reportedly did so because their child's school or daycare closed."

Even with daycares reopened and the job market recovering from the worst of the pandemic, the cost of childcare can be a big burden for working families—as the median cost of infant care tops the cost of public university tuition in more than half of the states in the U.S., according to the Economic Policy Institute. That can be a huge barrier for young parents staying in the workforce—and lead to increased debt.

Women shouldn't need disability insurance as a stopgap for unpaid maternity leave.

A July 2022 study from the online insurance broker Breeze surveyed 1,001 working women between the ages of 18 and 44. The findings were heartbreaking.

They found that 75 percent of women would have no savings left if they had an unpaid eight-week maternity leave—and the highest percentage of respondents said that an unpaid eight-week maternity leave would present a "major, possibly permanent setback" to their finances. Most parents do end up having to take unpaid leave, as only 25 percent of U.S. workers have paid family leave through their employer.

While disability insurance can be a beneficial stopgap, it is not a permanent solution. Even this service comes at a cost—sometimes hundreds of dollars per year—that is exclusively passed on to moms, not dads.

Take these three steps to level the debt playing field today.

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Acknowledge that there is a "pink tax."

After suffering from depression, Nika Booth got serious about getting out of her six-figure debt burden. She started documenting her debt-free journey on social media as Debt Free Gonnabe. This personal quest turned into a personal finance community and coaching business, helping thousands of people take control of their finances and get out of debt. She reminds women that the pay gap and debt burden are aggravated by the so-called "pink tax," the popular name for gender-based price hikes.

"Women earn a fraction of what men make. As a result, women pursue higher education, and subsequently more student debt, in an effort to increase their earning potential and close this gap, to no avail. Additionally, women pay more for items like clothes and personal care, such as razors, shampoo, and feminine care/menstruation products, and the applicable sales tax," Booth says. "All of these minimize the amount of disposable income needed to save, pay off debt, and invest to build wealth."

The first step? Recognize that those lower-priced gray razors function just as well as the pricey pink ones. The same goes for shampoo, lotion, and other body care products that are needlessly upsold to women. Institutions and public spaces could go a step further to provide feminine hygiene products for free in restrooms—as with hand soap and toilet tissue—rather than charging per piece in vending machines.

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Teach women and girls about financial literacy.

Bank of America's "Preferred Insights: Hindsight is 20/20" personal finance report showed that women were less likely to be taught about finance and investing topics by their parents. Forty-one percent of women (vs. 51 percent of men) said they were taught how to invest and save for retirement, 27 percent (vs. 45 percent of men) learned how to make good decisions when there is a market downturn, and 26 percent (vs. 40 percent of men) learned how to find a financial advisor.

That lack of financial literacy education for women can be costly, as a 2022 TIAA Institute survey found that people with low financial literacy were six times more likely to have trouble making ends meet, and three times more likely to be debt constrained.

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Encourage all men to be allies.

Booth says that men can be change-makers too—by acknowledging their privilege to advocate for equal pay for women. "This doesn't just look like encouraging their workplace to be transparent about salaries or being transparent about their own earnings," she says. "It can also look like encouraging discussions about the gender pay gap among family and friends and holding space for the women in their lives to share their experiences. There's empowerment in having open and honest discussions that I believe help to bring about change."

Fathers, brothers, friends, and partners can encourage and help the women in their lives to establish an emergency fund of three to six months of expenses. Having a healthy savings cushion could help prevent minor problems from ballooning into large-scale and long-lasting debt.

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