march 2016 - debt advisory centre
TRANSCRIPT
MARCH 2016
Debt Advisory Centre offers impartial money and debt advice and access to the full range of debt solutions available in the UK. We’ve been advising those dealing with unmanageable debt for over 20 years and during that time we have helped over 400,000 people. We are currently supporting over 45,000 clients on their way to becoming debt-free.
Debt Advisory Centre offers access to debt solutions including Debt Relief Orders, IVAs (Individual Voluntary Arrangements) bankruptcy and Debt Management Plans. For clients in Scotland we can offer all solutions including Trust Deeds, DAS (Debt Arrangement Scheme), MAP (Minimum Assets Process) and sequestration.
Debt Advisory Centre is a trading style of Gregory Pennington, which is authorised and regulated by the Financial Conduct Authority (FCA). It is part of the Think Money Group, based in Manchester. A certified Investor in People, Think Money Group has been included in the Sunday Times’ Best Companies to Work For in each of the past 10 years.
https://www.debtadvisorycentre.co.uk
About this report
To examine women’s attitudes to money and debt we analysed two strands of research:
First of all, we conducted research with 3Gem Research & Insights. The poll had responses from 2,500 women, across Scotland, Wales, Northern Ireland and England. The fieldwork was undertaken between 20 January 2016 and 3 February 2016 and the figures have been weighted to be representative of all UK adult women.
Secondly, we analysed our own data related to women who had approached Debt Advisory Centre for help with their problem debt between January 2013 and January 2016.
At Debt Advisory Centre, we seek to understand our clients’ evolving needs and the reasons they find themselves in problem debt. Through a series of reports, we are encouraging sector debate about how to meet consumers’ changing circumstances and needs.
Our first report, Women and Debt, examines the changing role of women in the household, and consequently, how they approach money, their attitude to budgeting and managing bills.
We’ve found that more women are struggling to manage their finances and are not just relying on credit to pay for big-ticket items such as holidays or furniture; they are borrowing to pay for their everyday living costs such as utility bills, housing costs, children’s clothing and food. The pressure on the finances of many women means they fall into arrears on their bills and credit commitments.
We also explore women’s confidence in making financial decisions, where they seek advice, and their financial lessons and regrets. The report examines trends around rising debt levels and assesses the reasons why more women, especially young women, are falling into a cycle of debt. Finally, the report looks at what changes in women’s circumstances would make them more/most content.
We hope that you find this report enlightening and that it initiates conversations about some of the key money issues facing women today.
Melanie Taylor Director of External Relations Debt Advisory Centre
About Debt Advisory Centre Foreword
3
When asked what causes them to worry the most, 30% of women say money is their greatest anxiety, followed by health, family, work, physical appearance and relationships.
MONEY CAUSES WOMEN THE
GREATESTANXIETY
Three-quarters of women say they were responsible for bringing in their own income and managing their finances by the age of 25. However, almost 10% of women say they still don’t feel financially independent. Interestingly, women in rural areas are more likely to say they are financially independent at 25 than those living in cities.
FINANCIAL INDEPENDENCE
BY THE AGE OF
25
55% of women now control their household budgets and this is consistent across all age groups. A further 35% of women share responsibility with their partners, while just 4% of those surveyed say their partner controls the household budget.
THE HOUSEHOLD
PURSE STRINGS
ARE HELD BY WOMEN
The research shows that most women seek information when making decisions about how to manage their money, get out of debt and plan for their futures. Around 40% of women either turn to their partner for advice or draw on the experiences of their mum or dad to make financial decisions. Women also use websites such as Netmums to research financial issues.
WOMEN AREPRO-ACTIVE IN SEEKING ADVICE
Few women have ever been given lessons in managing money outside of the home. Less than a fifth of those over the age of 35 have been given lessons in money as part of their education. In contrast, almost 60% of women say they learned about money at home.
NO LESSONS IN MONEY MANAGEMENT
WOMEN WANT
GREATERFUTURE SECURITYThe biggest financial regrets for women are not having more savings or a bigger pension. When asked what lessons they would tell their younger self, an overwhelming 57% would offer the advice of not ‘spending money you don’t have’ and putting additional money from a pay rise into savings rather than spending it.
MORE WOMEN ARE RELYING ON CREDIT TO LIVE THEIR
LIVES69% of women use credit. Over half have a credit card, 14% have a store card and a similar number pay by instalments when shopping from catalogues. A quarter of women use credit to pay for day-to-day living costs such as food or utility bills and a further 10% take cash advances on their credit cards when their regular income runs low. 1 in 10 women who use credit owe more than £10,000.
MOUNTING ARREARS A third of women are falling behind with payments on their unsecured credit and household bills. The biggest areas of arrears are rent/mortgage, credit cards, council tax and utility bills. Almost a fifth of those in arrears are at least four months behind with their payments. 53% of single mums are struggling with debt compared with 29% of mums with a partner. Failure to budget, a fluctuating income, ill-health and becoming a mum are the biggest causes of arrears.
DEBT IS AFFECTING
WOMEN’S
HEALTHAlmost 80% of women with debt say it has had a negative impact on their lives. In many cases, debt has affected more than one area of women’s life. Two-thirds said their physical and mental health has suffered because of the worry of debt. Women also report that debt stress has impacted their relationship with their family and friends or has stopped them from getting a job.
HAPPINESS COMES FROM BEING
DEBT-FREEWhen it comes to happiness, the majority of women want stability in their everyday finances rather than spare cash to treat themselves. Having the security of owning a home without a mortgage, being free of unsecured debts and being able to comfortably pay household bills would make two-thirds of women most content.
Hig
hlig
hts
5
The words “women” and “debt” are becoming ever more closely linked.
Data from the Insolvency Service shows that the number of women applying for debt relief has overtaken men for the first time. Last year, 22.2 in every 10,000 adult women in England and Wales applied for a form of insolvency compared to 21.2 men.
The figures are more worrying amongst young women aged 25 to 34, where it jumps to almost 33 in every 10,000 women applying for insolvency last year. That compares to 25 in every 10,000 young men.
Our own data shows there has been an increase in the proportion of young females seeking help with problem debt. In January 2016, 11% of those who approached Debt Advisory Centre for help were women aged 18–24 compared with just 2% in January 2013.
Levels of debt are increasing among women. In January 2016, 80% of those seeking help from Debt Advisory Centre owed over £5,000 to their creditors. In the same
period of 2013, 67% owed more than £5,000.
Almost three-quarters of women with problem debt owed money to least five lenders at the start of this year.
So why are so many women struggling with debt?
One explanation is that more women are working than ever before and this income is giving women a greater opportunity to borrow in their own name.
However, women are more likely to work part-time, and typically earn less than men. They are also more likely to take the lead in looking after children and older relatives. All of this may make it harder to pay-off their debts.
These debts loom large in daily life. Problem debt brings with it stress that affects how women work, how they behave with their families and how they feel about their future prospects. Problem debt impacts the physical and mental wellbeing of women and can tear apart families.
80% of those seeking help with debt from Debt Advisory Centre owed their creditors over £5,000 in January 2016
Introduction
7
So how do these changes impact the role that women have in managing the household budget and planning for their future?
When asked ‘who looks after your household budget and everyday living costs?’ over 55% of women said they take sole responsibility for management of household finances.
While many women will take the lead in looking after money out of necessity, because they are single or divorced, just 4% of women hand total responsibility for the household budget to their partners.
Just over a third of women split responsibility for managing their household budget with their partner. However, this number jumps to more than 50% for women who are married.
Our research indicates that where women live can shape how they see their role in managing household finances. City-dwellers (60%) are more likely to take sole responsibility for holding the purse strings rather than making decisions with their partner (29%). That compares to 53% of women in rural areas being the sole keeper of the household purse, and 39% who split decision-making with a partner.
The workplace has changed beyond recognition over the past forty years. More women are in work than ever before and they are represented in most professions.
In August 2015, 69% of women aged between 16 and 64 were in work. While female employment rates still lag men – at 78% – they now stand at the highest level since records began in 1971.
Women still take the lead role in looking after children, even though the increase in flexible working makes it easier for both parents to combine work and childcare. Consequently, the demands of trying to combine the roles of motherhood and
employee mean part-time roles are still dominated by women.
There are 8.4 million women in full-time employment and 6.2 million women in part-time employment. That compares with 14.4 million men in full-time employment and 2.2 million men working part-time, according to the Office for National Statistics.
Women also earn less than men. According to the Equal Pay Portal, men working full-time earned £567 per week in April 2015, compared with the average for women of £471.
Just as things have changed in the workplace, life has also been transformed at home.
According to the charity Gingerbread, there are around 2 million single parent families in the UK and 90% of these are women.
Around a third of working mothers in Britain are now the main breadwinners for their households because of those huge shifts in employment and family, according to the Institute for Public Policy Research’s 2015 report ‘Who’s Breadwinning in Europe’.
With less income to draw on, women may be more likely to use credit to make ends meet, and then find it harder to repay their debts.
Who holds the purse strings?
60% of women in cities hold the purse strings.
over
55% of women said they take sole responsibility for management of household finances
WHO LOOKSAFTER YOURHOUSEHOLDBUDGET?
I have sole responsibility 55%
My partner has sole responsibility 4%
My partner and I share the responsibility 35%
My parents/ other family members (not partner/ husband/ wife) have sole responsibility 2%
I share responsibility with my parents (not partner/ husband/ wife) 3%
I/ We never budget 1%
9
While women play a more central role in looking after their own and their families’ finances, few women have ever been formally taught how to manage money, particularly outside of their childhood homes.
In fact, less than a fifth of those over the age of 35 have been given lessons in managing money as part of their education. The majority – almost 60% – say their knowledge of budgeting and looking after money is passed down from their parents.
In recent years, some aspects of personal finance have been taught in schools in Wales, Scotland and Northern Ireland, but it was only added to the national curriculum in England in 2013.
The research shows that young women are most likely to receive lessons in money either at school or college, with 35% of those aged 18–24 saying their financial knowledge was developed as part of their formal education. That compares to just 15% of women aged 45 or over.
Parents have a vital role to play in educating their children about money, with 57% of those asked saying they learned about household budgeting at home. Even when some lessons in money management have been given at school or college, more than 60% of 18–34-year-olds are still taught about money by their parents.
In contrast, more than half of those aged 35 and over were not given any lessons in money from their parents, which could reflect the view of previous generations not to talk about money in front of their children.
Where do women learn about money?
Financial independence
The age at which women gain financial independence has largely remained the same throughout the generations. Three-quarters of women questioned across all age groups said they became financially independent by the age of 25. There is also no difference between women in urban or rural areas.
Surprisingly, 10% of women said they still don’t feel financially independent, with differences between younger and older women. Some 9% of women over 55 still don’t feel independent, compared with 5% of women aged 35–44.
Women are pro-active in seeking advice
The research shows that women seek comfort when making decisions about how to manage their money, get out of debt and plan for their futures. They typically use more than one source to gain information.
Around 18% of women turn to their partner for advice and the same number of women draw on the experiences of their mum or dad to make money decisions. Women also do research on websites such as Netmums, through newspapers and on search engines such as Google.
75% of women questioned across all age groups said they became financially independent by the age of 25.
PERCENTAGE OF WOMEN
WHO LEARNED ABOUT MONEY
AT SCHOOL
PERCENTAGE OF WOMEN
WHO LEARNED ABOUT MONEY
AT HOME
Yes 21%
No 79%
Yes 57%
No 43%
11
Women, money and confidenceAre women natural money managers or are they increasingly finding themselves playing a role that they don’t feel they have the skills for?
An overwhelming 80% of women say they are either ‘strict’ in sticking to their household budget or ‘usually’ stick to their budget. Managing budgets is more difficult for the remaining fifth of women who say that they keep to their household budgets ‘sometimes’ or ‘rarely’.
There is little difference between women who live in cities and those in rural areas when it comes to budgeting, with 27% of women in cities saying they are strict about budget management, compared to 23% in villages.
Is personal finance designed for women?
Being able to budget well and to make good decisions about financial products requires
women to feel confident in understanding information about all areas of personal finance.
There are big differences in the levels of confidence that women have when making everyday decisions about money and making big financial decisions.
Three-quarters of women say they feel confident when reading their bank statements and 57% are confident in looking at information about gas, electricity and water bills, and other household bills. Half of women feel ‘very confident’ insuring their homes and cars, and making decisions about credit cards, store cards or loans.
Confidence levels tail-off when women are asked how they feel about bigger financial decisions such as mortgages and pensions. Reading information about mortgages leaves 14% of women feeling confused and 13% feeling stressed or bored.
Just 28% of women are ‘very confident’ in making decisions about their pension, and 31% feel confused when reading information about pensions and annuities.
Money and anxietyThe research raises the question of whether women enjoy their role as keeper of the household purse. When asked what causes the most anxiety in their lives, around a third of women said money. In fact, almost twice as many women chose money over their relationship, health, family, work and appearance.
Having the security of owning a home eases the anxiety women have around money, according to the research. Just a quarter
of women who live in their own home ranked money as their greatest anxiety, compared with 42% of women in privately rented homes and 40% of women in social housing.
There is a similar correlation between marital status and anxiety. A quarter of women who are married with children worry about money the most. For 36% of co-habiting women with children, money is the biggest concern. This jumps to 40% for single women with children.
As well as money, women worry about their health and their family, followed by their appearance, work and finally, their relationship.
PERCENTAGE OF WOMEN WHO ARE ‘VERY CONFIDENT’ LOOKING AFTER:
Mortgages
38%
Credit cards, store cards, loans
50% Savings
45%
Bank statements
76%
Pensions
28%
Credit reports
44%
Car and home insurance
50%
Household bills
57%
Money 30%
Health 18%
Family/ children 18%
Work 14%
Weight/ physical appearance 13%
Relationship 7%
WHAT CAUSES WOMEN
THE MOST ANXIETY?
30% of women said money causes them the most anxiety in their lives.
13
Live for today or save for tomorrow? Regardless of their age or whether they live in a city or a village, just over half of women want to plan for their future, rather than live for today.
Even though more than half of women have their sights on future security, a fifth of women don’t have their own savings accounts to help cover unexpected events in their lives. Conversely, a quarter of women have savings of more than £5,000.
On average, women have more than £2,000 in savings to weather unexpected events.
The level of savings that women have increases throughout their lives, with women aged 55 and over having on average £2,674 tucked away.
The biggest differences in attitude are found in the type of housing that women live in and their marital status.
Married women with children are more likely to save than women who are co-habiting or single with children.
45% 55% Similarly, there are marked differences in the saving habits of women who own their own homes when compared with those who are renting privately or in social housing. Some 60% of women who live in their own homes put aside money, compared with 40% of women who live in social housing.
Women who own their own homes have savings of £2,594 on average, whereas women in social housing have £871 on average – almost a third of the amount.
There is also a big divide between urban and rural dwelling women
when it comes to savings. Women in rural areas have on £2,397 in savings, compared to women in urban areas who have £1,648 in savings.
Women living in the countryside are also more likely to know their bank balances to the nearest £1 than women in the city – 35% vs 25%. The amount women have in their bank accounts directly correlates to their age, with those under 25 being least likely to know their bank balance, and those over 55 the most likely.
Who is saving?
SAVE FOR TOMORROW
WOMEN IN SOCIAL HOUSING HAVE A THIRD OF THE SAVINGS OF HOME OWNERS
SINGLE WITH CHILDREN
47%
MARRIED WITH CHILDREN
58%
LIVING WITHPARTNER AND
CHILDREN
46%
LIVE FOR TODAY
15
While the research indicates that women strive for financial security, it also shows that many women are borrowing money not just to pay for lifestyle choices, such as holidays and clothes, but also to meet everyday household bills. Just 31% of women who took part in the research said they didn’t have any unsecured credit.
Credit cards are by far the most popular way for those women who use credit to
borrow money, with 53% of respondents saying they have at least one credit card, regardless of whether they live in the city, suburbia or in the countryside.
As you’d expect, women use their credit cards for a variety of reasons, from spreading the cost of a holiday, to taking advantage of discounts on clothes and ensuring big purchases are protected. Women under 24 are more likely to use their credit cards
to buy clothes during seasonal sales than for any other reason.
The biggest reason women use a credit card is to pay for housing, utility bills or food shopping, with a quarter of those asked relying on credit cards to cover everyday living costs. Women in rural (29%) parts of the UK use their credit cards to pay for living costs more than those in cities (20%). A further 11% of women draw-out money on their credit cards when their wages run low.
£6,000
£5,000
£4,000
£3,000
£2,000
£1,000Going into the red
Overdrafts are the second most popular form of borrowing among women, irrespective of their age. Worryingly, around a fifth of women use overdrafts to fund their daily lives.
Store cards, which enable consumers to borrow from a specific shop at interest rates of between 19% – 30%, are the preferred method of borrowing for 14% of women. Some 13% of women buy items through catalogues that enable them to spread the cost.
When focusing on credit cards, store cards and catalogues, just half of women pay-off their balances in full each month. A third of women vary their payments depending on what they can afford, and 14% make only minimum payments.
Spreading the cost of essential items such as household furniture and white goods puts pressure on the purse of some women, and 5% opt for interest-free loans available directly through stores. Around 2% of women have to resort to using higher interest
options available through specialist stores, and 6% use payday loans or door-step loans to make ends meet.
Levels of personal unsecured debt
Women have, on average, £4,235 of unsecured personal credit, with the highest levels of debt among those under 45. While half of women have £500 or less of borrowings, just over 10% of women have at least £10,000 of debt.
Women in England and Wales have, on average, £1,000 more debt than their counterparts in Northern Ireland and Scotland.
Urban living is having a significant impact on women’s
money habits, with unsecured borrowings standing at £5,162, compared with £3,860 for women in suburbia and £3,474 for women in rural areas.
Many types of credit are more accessible to consumers who own their own homes and who have stable employment. Therefore, borrowings among women who work full-time (£5,341) are significantly higher than those with part-time (£3,477) or zero-hours employment (£2,240).
Worryingly, borrowing among women who are unemployed stands at £2,529 on average, and full-time mothers and homemakers have debts of £2,468. The average debt of retired women is £1,928.
WHAT ARE WOMEN
USING CREDIT CARDS FOR?
To take advantage of sales and promotions on clothes 16%
To spread the cost of a holiday 13%
To ensure big purchases are protected 24%
To pay for social events and entertainment 2%
To pay everyday living costs, such as food or utility bills 25%
Additional cash when wages run low 11%
Other 10%
TYPES OF UNSECURED LENDING*
CITY
£5,162SUBURBS
£3,860 RURAL
£3,474
AVERAGE DEBT LEVELS FOR WOMEN
AVERAGE LEVEL OF PERSONAL UNSECURED DEBT BY LOCATION
SCOTLAND
£3,561ENGLAND
£4,510WALES
£4,500NORTHERN
IRELAND
£3,377
*Please note the total is greater than 100% as many respondents had more than one form of debt.
I don’t have any unsecured credit
31%
Interest-free credit for furniture e.g. DFS
5% Catalogue
12%
Credit card
53%
Doorstep Loan
3%
Pay-day Loan
3%
Consolidation Loan
2% Overdraft
19%
Installment purchase e.g. Brighthouse
2%
Car loan
9%
Store card
14%
17
Women and debt: the hotspotsWhile credit can be a useful way of financing the things that women and their families need, a third of women who use credit either ‘only just manage’ to meet their debt repayments or are ‘unable’ to meet them at all.
While women in rural areas are more likely to use credit to pay for everyday living costs, they are better placed at managing their borrowings, with 72% saying they comfortably manage repayments compared to 62% of women in cities.
Looking at the regions, Yorkshire (42%), the South East (40%), London (39%) and the North West (39%) are the areas with the largest number of women who say they regularly struggle with debt repayments. Scotland, Northern Ireland and the West Midlands are the places where the fewest number of women say they are struggling.
The picture is worse for women who live in social housing, as just over half regularly struggle to keep-up with their debt repayments. Around 45% of women who
privately rent also struggle with repayments compared to just 26% of women who own their own homes.
Debt has the greatest impact on the finances of women who are raising children on their own. Almost twice as many single than married mothers (53% vs 29%) say they regularly can only just afford debt repayments or have failed to afford them. Around 40% of women with children who co-habit say also struggle to keep-up with repayments.
While 8% of women are struggling with repayments on their credit cards, just as many women are in arrears with their utility bills, council tax and their rent or mortgage. Overall, a quarter of women who use credit have fallen at least three months behind with their day-to-day essential bills.
The higher cost of living in many cities could explain why twice as many women in these areas have arrears on their rent or mortgage, utility bills and council tax, compared with those in rural or suburban areas.
Unstable employment is another factor that hinders women’s ability to manage their borrowings. A report in September 2015 by the Office for National Statistics found there has been an increase in companies using zero-hours contracts, which do not guarantee a minimum number of hours of employment.
Zero-hours contracts can give greater flexibility to women raising families, which could explain why more than half of those on this type of contract are women, according to the ONS. However, having a fluctuating income also makes it significantly more difficult to budget for household bills and debt repayments. The Women and Debt report found that 53% of women with zero hours contracts struggle to repay their debts.
Women who are self-employed (46%), or have part-time work (40%), are also more likely to find it difficult to keep-up with debt repayments because of lower or varying income. That compares with just 29% of women who are in full-time employment.
SCOTLAND
28%
NORTHERN IRELAND
29%
WEST MIDLANDS
29%
NORTH WEST
39%
SOUTH WEST
32%
EAST MIDLANDS
30%
LONDON
39%
PERCENTAGE OF WOMEN WHO ANSWERED EITHER ‘I REGULARLY ONLY JUST MANAGE TO MAKE REPAYMENTS ON MY DEBT’ OR ‘I AM REGULARLY UNABLE TO MEET REPAYMENTS ON MY DEBT’.
SUBURBS
33%
RURAL
28%
CITY
38%
HOW WELL DO WOMEN
MANAGE THEIR DEBT?
I comfortably manage to make repayments on my debt 66.6%
I regularly only just manage to make repayments on my debt 29.2%
I am regularly unable to meet repayments on my debt 4.2%
NORTH EAST
33%
YORKSHIRE
42%
EAST ENGLAND
31%
WALES
33%
SOUTH EAST
40%
19
Debt, health and relationships The reasons why women fall into problem debt largely fall into three categories – unexpected life events, such as relationship breakdown, over-spending, or relying on credit to make ends meet.
A fifth of women say they got into difficulty with debt simply because they failed to set a budget for their everyday living costs, so they spent more money than they had and relied on credit to fill the gap. A further 7% of women took out credit to fund non-essential items, such as holidays or home improvements, or even to try to match the lifestyles of their friends.
Overwhelmingly, women are taking on debt to get through difficult stages in their lives. Almost a fifth of women had to take time off work either through their own ill-health, or while they looked after a sick child or other relative. Changes at work also have a big impact, with 16% of women say they are struggling with debt after being made redundant or facing a change in their working hours.
Whether or not women have a stable family is another factor that can cause financial difficulty. Having children is the reason why 13% of women say they are now struggling with debt.
Conversely, 7% of women say the breakdown of a relationship and the life changes that followed meant they were unable to meet debt commitments. The partners or ex-partners of a further 6% of women left them to repay debts they took in joint names.
As women strive to clear their debts, half say they have had to cut-back on essentials such as food, clothing, heating their homes, and travel costs so they have money to make debt repayments. City-dwelling women (58%) are significantly more likely than women in rural areas (43%) to cut back on essentials, as they struggle to clear their arrears.
Debt and women’s mental health
Worrying about debt can permeate every aspect of a woman’s life, from the relationship with her partner, family and friends, to her ability to get a job or concentrate on everyday tasks. Debt worries can cause women to feel stress that can lead to depression, cause poor physical health and impact their overall wellbeing.
Indeed, 80% of the women questioned, who had debt, said their lives have been affected by debt in several ways. More than half of women said their mental health had
been affected by debt worries and 30% said their physical health had also suffered. This remains the case for women across all age groups including young women under 25 years old.
More than half of women said their mental health had been affected by debt worries
While the types of debt, levels of debt and women’s ability to manage debt varies depending on where they live, who they live with and what kind of job they have, there is greater similarity when it comes to the impact that debt has on women.
Of the women who have arrears, 51% in cities, 55% in suburbia and 48% in the countryside admitted to suffering mental health problems as a result. The same story is told when comparing women’s housing status and their likelihood of having poor mental health caused by debt worries – 50% of home-owners; 56% of private tenants, and 56% of those in social housing who have arrears have suffered mental health problems.
The research suggests that facing debt problems alone can affect the health of women. Almost two-thirds of single mothers with problem debt said they have faced mental health problems – the largest number across all demographic groups questioned.
Many women also said their relationship with those closest to them had been affected by their money problems. A fifth had faced problems in their relationship with their partner, children and friends, as they worried about the consequences of problem debt.
WHY ARE WOMEN
STRUGGLING WITH DEBT?
Relationship break-up 7%
Had a family 13%
Time-off work with sickness/ or to look after a sick relative 18%
A partner/ ex-partner failed to make repayments on joint credit 6%
Change in working hours/ made redundant 16%
Failed to budget 20%
I tried to match the lifestyle of friends 2%
Took out credit for a holiday/ car/ home improvements 5%
Other (please specify) 13%
HOW IS DEBT AFFECTING WOMEN’S LIVES?
It has affected my relationship with my partner/family/ friends
20%
Other
3%
It has affected my physical health
34%
It hasn’t had any impact on my life
22%
It has prevented me from getting a job I wanted
8%
It has affected my mental health
51%
65% of single mothers said they have faced mental health problems caused by problem debt.
21
Money and happiness ConclusionThe question of whether money can buy happiness has long been debated.
Many of us are brought up to believe that money can’t buy happiness and instead it is family, job satisfaction and experiences that enrich our lives.
Yet a study by the Office for National Statistics found that life satisfaction, sense of worth and happiness increases as the level of household wealth increases. The study also found that people’s anxiety reduced as their disposable income and assets increased.
So it may be the case that rather than money itself being the route to happiness, having more disposable income brings with it the comfort that you can withstand unexpected events, or absorb a significant purchase, such as that of a household appliance, without taking on unmanageable levels of credit.
In short, money can provide more security and that creates a better feeling of wellbeing.
As part of this research, we asked women what change in their financial circumstances would make them happiest.
For most women having the security of being able to comfortably live their everyday life would make them happy. Almost two-thirds of women said owning their homes without a mortgage, paying-off debt and being able to afford their household bills are the key to happiness.
A further 39% said they would find happiness in buying a new car or having experiences that can create memories, such as a holiday or smaller treats.
Interestingly, women under-25 and over-55 are most likely to say they would value having spare money to spend on experiences. Whereas, women in their 30s and 40s would gain greater happiness from owning their own home.
Being married appears to influence women’s feelings towards happiness and security. Some 37% of women who are married with children and 32% of women who are married without children say being mortgage-free would make them happiest. That compares to 26% of women who co-habit with children and 18% of single mothers.
Single mothers place the greatest emphasis on being able to comfortably afford their household bills. Twice as many women who are raising children on their own (31%) would find happiness in being able to pay their household bills compared with women who are married with children (15%), which suggests single mothers face the greatest difficulty in meeting everyday living costs.
Our first report has looked in detail at women’s changing relationship with money. We’ve found that money causes women more anxiety than any other aspect of their lives, including their children, relationships and work.
As with many aspects of life, the changing nature of women’s finances has brought many advantages, but has also come with downsides. Women are more in control of their lives than they’ve ever been – they are typically financially independent for longer and earn more. But they are also borrowing more, and the challenge of making an income stretch to pay essential bills and to enjoy experiences such as days out with children or holidays is leading many women into a cycle of debt.
For a growing number of women who are using credit to fund their lives, making debt repayments has become unmanageable.
Typically having lower pay than men, being more likely to take time away from work to care for families, and unexpected
life events such as relationship breakdowns or redundancy, is impacting women’s ability to successfully manage money.
Falling behind with debt repayments can affect every aspect of a woman’s life, putting a real strain on relationships with her partner, family and friends. Debt worries can cause women to feel levels of stress that can lead to depression, damage physical health and their overall wellbeing.
While women have a key role in looking after their own and their families’ finances, few women have ever been formally taught how to manage money. The lessons they learn often come from their parents. This may mean they have positive role models who instil in them a need to budget and save, and conversely, it may mean they learn to rely on credit to make ends meet.
Just as children are taught about healthy eating and how to be good citizens in school, there is a need to make financial education an important part of the curriculum in primary schools so children are
equipped with the skills they need for their future lives.
For those women who are already in a cycle of debt, there needs to be greater awareness of how to break-free, and to achieve the financial security that the report demonstrates is the key to happiness for the majority of women.
Anyone who feels that they are being overwhelmed by their debt should seek advice as soon as possible, from the Money Advice Service or a specialist debt advice provider, such as Debt Advisory Centre. Whilst problem debt can feel like a life sentence, it isn’t. With the right advice and support, people can draw a line under their debts and make a fresh start financially.
BUYING A NEW CAR
10%
BECOMING MORTGAGE-FREE
28%
PAYING-OFF UNSECURED DEBT
16%
HAVING SPARE MONEY TO SPEND
ON A HOLIDAY
21%
BEING ABLE TO COMFORTABLY AFFORD
HOUSEHOLD BILLS
17%BEING ABLE TO AFFORD SMALL
TREATS
8%
WHAT WOULD MAKE WOMEN HAPPIEST?
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