get hustlin'

How Women Can Break the Cycle of Debt

Closing the gender gap on debt starts with a new financial mindset

If you’re like me, you love to splurge and spoil yourself occasionally. There’s something invigorating about a spa day or a night out with the ladies for a nice dinner and a couple glasses of wine. Perhaps you like to take a fun trip here or there to just get away, or buy a new outfit that makes you feel beautiful and special.

It’s human nature to treat yourself, and we ladies have mastered the craft.

But for a lot of women, treating yourself can become an undisciplined—and financially dangerous—habit.

Why women struggle more with debt then men

A few weeks ago, from across the pond, the English paper The Telegraph reported that there’s an alarming trend of women becoming more likely than men to go bankrupt.

As they report , “Last year, 22.2 in every 10,000 adult women in England and Wales applied for either bankruptcy or another insolvency status, down from 26.8 in the prior year. Meanwhile, the number of male applications fell from 33.3 to 21.2.”

Telegraph columnist, Kara Gammell, commenting on the study, wrote about her (and her friend’s) experiences in splurging as a big component of women’s struggle with debt:

We’ve all been there at some point. Whether it’s another red bill landing on your doormat, a credit card balance that never seems to shrink - or simply not quite having enough cash to get you to through to payday.

For a growing number of women, the last decade has been spent living in their overdraft. We long to be savers, but manage to justify sneaky purchases to ourselves - and for many the concept of money management involves rummaging behind the sofa for a bit of spare change.

Now, I know this is not just a UK problem. It’s a woman problem, and we need to get it together! In fact, U.S. News & World Report reported that in the US, “A National Debt Relief survey found 66 percent of women carry credit card debt, compared to 33 percent of men.”

Kick poor spending to the curb

The report credited the gender pay gap with the higher numbers, but let’s face it, the real culprit is lack of financial education and poor spending habits.

I have sympathy for young women who are in debt. After all, at one point in our life, Robert and I were over $1 million in debt. It can feel crushing, and it can be easy to give up and just keep spending.

Get a side hustle

For Robert and I, however, we knew we had to get financially smart. Rather than settle on simply taking jobs and hoping to get out from our mountain of debt, we got creative and hustled (in a good way!). We taught classes, consulted, and invested. We worked a lot, we learned a lot, and we also paid off a lot. Those years were formative in allowing us to become financially free just over a decade later.

This is why I was so encouraged to read an article in Quartz a few weeks back called “ Your Salary Shouldn’t Be Your Only Source of Income ,” in which author Jane Barratt writes:

Millions of words are written everyday about personal finance. Most of these are sensible, but lack the psychological and behavioral aspects that help people break bad financial habits. In the meantime, the advertising world bombards you with great ways to separate you from your money, by blurring the line between “need” and “want.”

For women, the impact of this double bind is most pronounced. While women are said to drive the majority of consumer spending in the United States, they also feel less confident about their retirement than men.

The key to breaking that cycle is to abandon the old advice of “spend less, and save more.” To really make money for the future, women have to make a concerted effort to reprogram themselves from a consumption lifestyle to an active investment mindset. In other words, make hustling your default and risk your friend.

Amen and amen! Barratt goes on to say:

You can earn more money by spending less. But you should also ask for that raise—and get a side hustle. It’s extra income, but more than that, it extends your marketability by demonstrating initiative and ensuring you have skills outside of your day job.

Whether it’s learning to code and helping small businesses with their digital presence, or starting your own small business on the side, everyone needs multiple ways to earn money. The days of companies taking care of you are long gone.

This is what we’ve been teaching at Rich Dad and Rich Woman for years. There are two ways of approaching life, by cutting back or by scaling up.

Change your financial mindset!

At the end of the day, the best way women will grow and be empowered is to 1) learn how to create more money so that treating yourself makes financial sense and 2) rely less on the very power structures that have sold them short.

If you want to break the cycle of debt and money problems in your life, now is the time to invest in your financial education, get your side hustle going, and generate the life you want to live—rather than relying on the credit card companies to help you do so.

Original publish date: August 27, 2015

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