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When was the last time you checked your bank statements, worried about paying the next bill? Does it happen to you often? You may be surprised to learn that women are in overwhelmingly more debt than men. A recent survey by National Debt Relief shows that 63 percent of young women (18-24) carry credit card debt but only 36 percent of men in the same group carry the same debt.
This phenomenon, known as the debt gap, reveals the enormous discrepancies between men and women in the workforce. This gap has been postulated as a byproduct of the gender wage gap. In some places, women still make less money than their male counterparts, forcing them to take out larger loans or spend greater amounts with the credit card.
Thus, it seems that the solution would be to start with closing the wage gap. In a U.S. News article by Abby Hayes, finance blogger for The Dough Roller, she gives four pieces of advice for women to plan ahead and reduce the mounting debt headed their way post-graduation.
Women are often kept at a pay disadvantage because of their reluctance to negotiate. U.S. News reports that a 2010 study published in the Journal of Personality and Social Psychology found that women “aren’t as assertive as men when it comes to negotiating their starting salaries.”
According to Harvard Business Review, women’s reluctance to negotiate has less to do about their general confidence or skill; instead, women refrain from negotiating because of how they get treated when they try. HBR writes, “Women get a nervous feeling about negotiating for higher pay because they are intuiting – correctly – that self advocating for higher pay would present a socially difficult situation for them – more so than for men.”
But, learning to negotiate properly gives agency for women to demand just compensation. Take a look at this video by Lean In for tips.
Credit cards are great when used wisely, but incredibly costly when not. Understand the terms of service of your credit card before you start swiping to prevent yourself from overspending, or even under-spending.
Daniel Bortz, a staff writer on U.S. News, suggests always knowing when payments are due, using your rewards card to your benefit and knowing the bank’s policy on cash advances. In order to properly handle your bill, be able to answer the simple and the in-depth questions about your card.
It’s easy to rack up debt when you are using more than two credit cards. You really want to open that banana republic credit card … but do you have more than three cards? Discover says, “Credit card users should stop applying for new cards when they feel that they might not be able to manage all of their accounts responsibly.”
Having multiple credit card accounts means having to read separate bank statements, remembering every due date and allocating your spending in order to ensure that you’re not incurring too much debt. Additionally, Discover warns, “Cardholders may have too may credit cards when they are paying costly annual fees for rewards or benefits they may not be utilizing.”
Budgeting yourself month by month (or even week by week) is, perhaps, the easiest way to avoid credit card debt. The National Association of Federal Credit Union (NAFCU) suggests reviewing how you spend your money each month, cutting back on unnecessary expenses, setting aside funds for emergencies and revisiting your budget every few months to make sure your budget is as effective as possible. When you learn to budget your money, you are able to determine where you spend your money and to live within your available income. The NAFCU also says that budgeting improves your cash flow. For a sample budgeting sheet, visit the NAFCU website.
You don’t have to work in finance to be smart about your money. It’s about reading the fine print and knowing that you, as a woman, have bargaining power over your finances. Know your worth and claim what you deserve to close the wage and debt gap.
