Surge in women seeking debt advice who do not have enough to live on

New research conducted by StepChange Debt Charity has revealed that its clients who are women face an average budget shortfall of £30 per month, which is £70 less than men’s average monthly surplus of £40.

The charity’s new report, Bearing the burden, which has been published during Talk Money Week, looks at how debt differs between StepChange’s men and women clients, exploring why women are more vulnerable to financial difficulty, a situation which has been exacerbated by the rising cost of living. The research, which analyses StepChange client data, finds:

• The proportion of women seeking debt advice from StepChange has risen to 64% in the first half of 2023, up from 60% in 2021.
• In the first half of 2021, the proportion of women citing the cost of living as their main reason for debt was 6%, this more than doubled to 14% in 2022 and has doubled again to 28% in 2023. This compares to 21% of men in 2023.
• Nine in ten (88%) single parents seeking debt advice from StepChange are women
• Among StepChange clients with children, women’s average income is 14% lower than men’s.

As cost of living pressures have intensified, the detrimental impact on StepChange client finances has been clear. However, for women, this impact has been particularly pronounced – especially when it comes to keeping up with essential everyday costs such as food, energy, water, and childcare.

Women seeking advice from StepChange are more likely to be in a negative budget (36%) than men (32%), meaning after going through a full debt advice and budgeting session, their monthly income is not enough to cover their basic monthly costs. The average amount of money leftover in women’s budgets after covering essentials has taken a drastic hit year-on-year, dropping from a surplus of £7 in 2022 to a deficit of -£30 in 2023. In comparison the average surplus among men has not fallen as drastically, dropping from £56 in 2022 to £40 in 2023.

Debt advice clients with negative budgets have limited options when it comes to entering onto a debt solution and face a more challenging journey to becoming debt-free. This is because none of the established debt solutions are considered to work if someone does not have enough money available to repay debt after covering essentials like food, utilities, and rent.

The disparity between women’s and men’s budgets is linked to the differences in expenditure levels as women tend to spend more of their income on household costs such as energy and food. Also, women have higher amounts of arrears across utilities.

Overwhelmingly, the research shows that women with children are in a much more precarious financial position than men with children. Childcare commitments mean women are more likely to earn less, have employment gaps and be in part-time work, but women also spend on average an additional £655 per year on childcare than men.

StepChange says that more could be done to improve financial safety nets for women, particularly if they have children or are single parents, and ensure caregiving responsibilities do not mean women are at such an increased risk of problem debt.

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.”