This is Why It’s Important for Women to Reduce Their DebtOct 14, 2018
Many women in Canada face significant challenges — like lower wages, longer working hours and more family responsibilities. According to our new poll, Canadian women are also significantly affected by debt and affordability challenges. But taking steps to reduce their debt can help women overcome some of their challenges.
Our recently released Affordability Index found that women are more likely to be unprepared for significant life events like buying a home and retiring, and more likely to struggle to afford essentials like transportation and clothing. Personal debt can play a big role in those struggles.
Women are also one of the groups we found to be most likely to carry heavier debt.
It’s no wonder women face affordability issues. Their career and their wages are more often interrupted by child rearing and caring for other family members, like aging parents. In order to take care of the immediate needs in front of them, long-term financial goals can be put aside. And re-entering the workforce almost always means a long-term or permanent loss of wages.
The financial challenges women face can carry forward into retirement, where many women will experience smaller pensions (because of lower wages) that need to last longer, as women tend to outlive their male counterparts.
Our poll found that three-in-four Canadian women find it challenging to save for retirement, even though 81 per cent view saving for retirement as a necessity.
In order to adequately prepare for an affordable present and future, it’s critically important that women focus on reducing debt now.
How to reduce debt when affordability is already an issue
- Talk to a professional. Speaking with a Licensed Insolvency Trustee (LIT) can provide you with a roadmap for how to reduce your debt, and what your best options
- Find the debt repayment strategy that suits you best. Balancing monthly costs, reducing debt and saving is tricky and stressful. That’s why exploring strategies is key. Find a method that speaks to your personal and financial personality. Learn about the debt snowball, the debt avalanche, the hybrid approach, and others until you find what clicks and can become habit.
- Eliminate your credit card debt as soon as possible. High-interest consumer debt can make be difficult to pay off. Use our debt calculator to get a realistic timeline for paying down your debt so you don’t get discouraged.
- Find out whether consolidation could work for you. Sometimes it’s beneficial to consolidate your debt, which can leave you with one simple monthly payment and a lower interest rate. That can decrease the stress of making all those payments, and help you pay your debt down efficiently.
- Don’t neglect your savings goals. Paying down your debt only means so much if you suddenly have an emergency and have no money to support yourself through it. An illness that affects your monthly income, a family member in need, or an emergency house repair could mean accumulating thousands in additional debt. An emergency fund is critical, and contributing consistently to your retirement goals will take a lot of pressure off in the future.
Women tend to juggle a lot in their personal and financial lives. Making the effort to reduce your debt now can alleviate some financial and emotional stress. Doing so can also give you the room to continue working towards your long-term goals and security.