Single mothers are more prone to debt cycles - What you need to know

By Opinion Time of article published May 7, 2021

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According to an analysis done by National Debt Advisors' (NDA) Research Department during the peak of the Covid-19 pandemic from March to December 2020, 80% of South African households spent their hard-earned income on paying off their debt.

In light of Mother’s Day on Sunday, 9 May, we ask the question: how are single-income households, especially those with female breadwinners, coping with the financial implications and spending constraints imposed by the pandemic?

According to Charnel Ernstzen, Managing Director at National Debt Advisors (NDA), “A recent analysis of our client base showed that, although 80% of women budget their income, 70% of them simply run out of money before month end. This leads them to seek out unsecured debt, and most likely approach unregistered money lenders in the township areas (Also known as “Mashonisa’s”).

“When we consider that 60% of South African households, according to Cape Town based analytics consultancy Eighty20’s Credit Bureau data, are fatherless and all financial responsibilities fall onto the mother, the implications for these single breadwinners and their families are heightened,” cautions Ernstzen.

The most distressed by the pandemic, single mothers are more prone to debt cycles

The 2021 PwC Women in Work Index says that as a result of the pandemic, progress for women in the workplace could be back to 2017 levels by the end of this year .“The research also showed that not only were women’s salaries the most affected, but many had to take on additional domestic responsibilities, resulting in exiting the workforce. South Africa’s latest employment figures echo this with vulnerable black women being the most negatively affected in terms of jobs and income,” says Ernstzen.

She adds that among car repayments, bonds or rent, electricity, rates and taxes, cell phones and data, the list of everyday expenses just keeps getting higher. As a single-income mother, this leads to a higher risk of taking on more debt to finance these expenses.

According to the analysis done by our National Debt Advisors (NDA) Research Department, around 65% of women amongst our client base reported a reduced income during the lockdown. Their spending focus had to shift primarily to food and necessities, as opposed to pre-pandemic, with 50% of their income going towards servicing debt.

“90% of our female-based clients are currently concerned with the ability to service their debt”, says Ernstzen “Every mother that we’ve engaged with, noted that adjustments had to be made to their household budget, with most having to cut back on not only perceived luxuries, but necessities”

You have options – and they’re more accessible than you think

Sadly, many single mothers are unaware of the debt assistance that they have access to. As an example, when receiving a demand for payment from a creditor, one has access to a debt counsellor to allow for debt review. This also keeps you safe from asset repossession.

“You don’t have to deal with harassment from your creditors. “If you’re struggling to make ends meet, get in touch with a registered and reputable debt counsellor to get guidance to a debt free future”. Your National Credit Regulator (NCR) registered debt counsellor will handle any and all correspondence” says Ernstzen.

Help each other in small ways to make a big impact

  • Ernstzen adds that as part of a community we also have a responsibility to help others in similar situations.
  • Offer to fetch the children of a single mother from crèche or after-care on-time, so that she doesn’t need to pay the late penalty fees;
  • If you are cooking for yourself and you have extra to spare, send some over to the single mom who works late.
  • If you are walking your own child to school, offer to do the same for her child – that peace of mind she will have through the entire day is priceless.
  • Don’t wait for her to reach out – She is already struggling and might not know how to ask for help - often a big stumbling block for single mothers.
  • Don’t judge her – offer help freely and unconditionally.

PERSONAL FINANCE

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