Budget Basics

Women and Money

Get Your Credit In Shape

According to Industry Canada, women:

• Form a greater proportion of people in bankruptcy than ever before at 41%.
• This has almost doubled in the last 20 years.

The single greatest predictor of whether a woman will end up in financial ruin is if she has children, according to bankruptcy researcher Elizabeth Warren, writing in The Two Income Trap. Plenty of parents know how expensive children can be, but that doesn’t mean that you shouldn’t have children. However, the added financial responsibilities of parenthood mean that you do have children you should budget more carefully and be extra vigilant about avoiding debt and setting aside money for emergencies.

It’s also important to maintain your own credit history, and try to keep it strong. Too often women want to help out their loved ones (including spouses) by cosigning, lending them money, or taking over the bills.

No one wants to think their marriage won’t make it. But the truth is, debt and money troubles are cited as one of the major reasons for divorce. So don’t cosign loans for a partner or spouse with a bad credit history, or you could end up with bills that last longer than the marriage. Even if you stay together, it helps to have one spouse with a strong credit history and a low debt ratio in case of emergencies.

Check your credit history at least annually and if it’s less than perfect, start the process of rebuilding it. It’s never too late! Visit www.consolidatedcredit.ca for free brochures about credit reports and scores, as well as divorce and credit.

If your family is digging itself into a debt hole, don’t be shy about asking for help. Even if your spouse isn’t willing to acknowledge the problem yet, it’s important to get advice before things become so bad that you have no choice but to file for bankruptcy. For a free, confidential consultation on your debt situation, call Consolidated Credit Counselling Services of Canada Inc. at 1-800-656-3920 or visit www.consolidatedcredit.ca.

Plan For Tomorrow

According to Statistics Canada:

• Well-over 40% of senior women living alone live below the pre-tax Low Income Cut Off (LICO).
• Women live longer, with an average life expectancy of over 80 years compared to 77.2 for men in 2002.
• Senior women live in poverty due to low pension incomes.
• 65% of people collecting public pensions are women.
• Many women have little Canada have little Canada Pension Plan (CPP/QPP) or private occupational pension income because these plans are based on lifetime earnings.
• In 2001, women earned approximately 71% of what men earned.

If you don’t take care of yourself who will? The good news is that a longer life means you have more time to save. Start small if you must – just start. Realize, too, that it’s never too late to start saving for retirement, urges Ruth Hayden, author of Start Where You Are. Even if you’re at or nearing traditional retirement age (55-65), you may still have 25 – 30 years of time for your investments to grow.

Women can be excellent investors if they take the time to learn. If you haven’t had the time or opportunity to study the stock market yet, join or start an investment club with other women. Many women-only clubs have excellent track records. It’s inexpensive to get started, and you’ll develop skills that will help you make better decisions about your retirement funds. Visit the Investors Association of Canada at www.iac.ca for information on investment clubs.