Gender gap revealed in debt crisis data

New research from StepChange Debt Charity reveals the increasing financial hardship and surge in women seeking debt advice, highlighting a gender imbalance in household finances.

The charity’s report uncovers disparities in the financial struggles between men and women, and urges more attention is given to the factors that make women more vulnerable to financial difficulties.

Key findings show the proportion of women seeking debt advice rose to 64% in the first half of 2023, up from 60% in 2021. 28% cited the cost of living as their primary concern in 2023 – compared to 14% in 2022 and 6% in 2021 – surpassing the 21% of men citing the same.

Shockingly, 88% of single parents seeking debt advice from StepChange are women. This imbalance can be partly attributed to the fact that women with children face a 14% lower average income compared to men with children.

As the burden of the cost of living intensifies, for women, especially, the impact is felt acutely when trying to meet essential everyday expenses such as food, energy, water, and childcare.

Women seeking advice from StepChange were more likely to be in a negative budget (36%) than men (32%). It means that after undergoing a full debt advice and budgeting session, their monthly income does not cover basic monthly costs. Over the years, the average surplus in women’s budgets after covering essentials has dramatically dwindled from £7 in 2022 to a deficit of -£30 in 2023. In contrast, the average surplus among men has seen a less drastic decline, dropping from £56 in 2022 to £40 in 2023.

The disparity in budgets between women and men is linked to differences in expenditure levels, with women spending a larger portion of their income on household costs like energy and food. Additionally, women tend to have higher arrears across utilities.

The research emphasises that women with children face an even more precarious financial situation than men in similar circumstances. Childcare responsibilities often result in women earning less, experiencing employment gaps, and working part-time. Moreover, women spend an average of £655 more annually on childcare than men.

Vikki Brownridge, CEO at StepChange Debt Charity, said, “While we’ve seen for a long time that women are more vulnerable to problem debt, the worsening of the situation due to the increasing cost of living crisis is concerning. The increasing price of basics combined with issues such as the gender pay gap, barriers to work and high childcare costs mean it is difficult for many to make ends meet.

“With women more likely to have a greater proportion of their income made up of benefits than money from paid work, this research highlights the shortfall between Universal Credit and living costs is making it harder for women to cope from day to day and build financial resilience. Women tend to have more debt across household bills like energy and council tax, and after the past two years of inflated prices, many are struggling to repay those debts.

“It is vital the government uprates social security in line with the inflation to help women who are struggling the most in the cost of living crisis. The experience of our clients also shows how important it is we make progress in addresses sources of the financial inequalities women face like the gender pay gap and high childcare costs.”

The research demonstrates a clear need to re-think financial safety nets for women, particularly those with children or single parents, to ensure that caregiving responsibilities do not increase their risk of falling into debt.

The research demonstrates a clear need to re-think financial safety nets for women, particularly those with children or single parents, to ensure that caregiving responsibilities do not increase their risk of falling into debt.