Unsecured credit

8.8 million single mothers at risk of turning to unsecured credit

The money merry-go-round is something all South Africans understand. Whether you are a high-end salaried worker living in the northern suburbs of Joburg or a middle-class South African settling for an average salary for a respectable job, money always matters. And if you are a woman, this is especially true. Considering that he looks after the children, as well as other family members, while also stocking the pantry and purchasing school uniforms, it is therefore not surprising that a 2019 TymeBank survey found that 59 % of women run out of money before the end of the month. . And if you’re a black woman, it’s even higher at 64%.

Adding further to women’s woes, according to data from the Eighty20 credit bureau:

  • Of the 19 million active consumers on credit, 57% are women, however, women hold 42% of the debt in value
  • 31% of women active in credit are in arrears compared to 30% for men
  • 58% of overdue loans are held by women, while 57% of loans in good standing are held by women.

“Add to that the devastation of the coronavirus pandemic – which has seen thousands of women lose their jobs or see their wages cut – and it is clear that South African women have a growing financial problem,” comments Neil Roets of Debt Rescue.

Just survive

Even though women have adopted money-conscious behaviors and reduced their daily expenses where they can, living in “survival mode” is a harsh reality faced by millions of women in our country, and it is is something that a recent Sanlam investigation revealed.

Among car reimbursements, bonds or rent, electricity, tariffs and taxes, cell phones and data, etc., the list of daily expenses grows longer, resulting in a higher risk of s ” indebted (more) to finance these expenses.

“While men and women are paying off more of their debts than before the pandemic, PayProp suggests that women spend 44% of their income on debt, leaving them with 23% of disposable income. That’s almost half of their income on debt! With the increase in the price of goods thanks to the increase in fuel prices and the rise in taxes on the price of fuel, life just doesn’t get any easier, ”says Roets.

Increase in applications, but more refusals

As a result, more and more people are turning to credit to help them get through the month. Of the 25 million active credit consumers in South Africa, 10 million are late in their payments, and in 2019, of the million new credit applications made, 55.4% were refused.

“This is important because denial of credit shows how little money people have, because they are unable to even repay their creditors for vital financial support,” Roets said.

Single it’s more serious

But it’s the 8.8 million single mothers (Eithy20) who are really hit hard – and are also the most likely to turn to unsecured credit for personal loans, payday loans, and credit card debt. . Indeed, 60% of households are fatherless, which means that all financial responsibilities fall on the mother. Despite this burden, what is interesting and encouraging is that women are also the best budgeters. According to TymeBank, 80% of women aged 25 to 45 have a budget, compared to 37% for the country. Maybe that’s because with so many mouths to feed, the money has to go even further.

Eat the elephant bite by bite

Managing money, especially when there isn’t a lot of it, is difficult. But there are things you can do to help you get through these difficult times. Here, Roets unboxes the most important:

Get educated: Make sure you understand money better and learn financial skills. Research suggests that women are less comfortable making investment decisions for retirement. Surprisingly, a 2018 Federal Reserve study found that only 32% of women with a bachelor’s degree are comfortable managing their own investments. Overcome this by reading books and articles and contacting your financial advisor. Or even search social media for relevant groups to join.

Set yourself financial goals: This is a great place to start and once you have a few steps in place it helps you move forward towards your goals. Make sure you have short and long term goals where you can celebrate small wins and big ones, like building your child’s education fund.

Build a budget: Gather all of your bills and bills and write them down in a book so you can physically see all of your monthly income and expenses. Subclass them in needs, for example “accommodation and food” or wishes such as “streaming services and restaurant meals”. Now, less your expenses than your income; If you have nothing left to save, you need to find ways to reduce your expenses or increase your income.

Be prepared for any emergency: A rainy day fund is a key part of any financial plan, although many of us don’t like to start one. It can protect you in the event of an accident, job loss or medical crisis. Try to save three to six months of living expenses and each time you get paid put even a little money aside in this fund. It will also give you a sense of accomplishment.

Avoid bad debts: Some debts such as a home or a student loan can be considered assets and constitute “good debt”. “Bad debts” are credit cards, bank cards and unsecured loans. Although they seem affordable, you will be paying several times as much in interest, so avoid this route if possible.

“Above all, believe in yourself. Money doesn’t make the world go round. It certainly helps, but keeping a positive attitude and trying to find smart ways to save money also goes a long way in improving your mood, which is far more important than what’s in your bank account, ”Roets concludes.


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