Men, women and debt: Does gender matter?

It’s hard to believe that in 2022 there’s still no law requiring that men and women be paid equal wages for equal work. White women still earn 84 cents for every dollar a man makes, and for women of color, the gap is even worse. Latina women earn 55 cents for every dollar their white male counterpart earns.

With income gaps this stark, is it any surprise that gender still plays a role in debt? For nonbinary individuals and other members of the LGBTQ+ community, data isn’t as robust. One study from the Ohio State University found that transgender and non-binary students reported higher average financial strain and were more likely to have student loans than cisgender students.

What are the differences in the finances of men and women?

Statistics only tell a small part of the story regarding finances. Someone’s ability to manage their money, credit, debt, and investments has nothing to do with the chromosomes they were born with or their current gender expression. External factors and societal pressure play a large role in finances.

On average, women are still responsible for the lion’s share of caregiving, including childcare and helping elderly parents, negatively impacting their lifetime earning potential. Women also tend to be more negatively impacted financially by divorce. By contrast, men feel socially pressured to exude wealth and status regardless of their success and frequently go into debt to keep up appearances.

Nonbinary and trans individuals routinely lack family support and have to take on more debt when starting than their cisgender peers. It wasn’t until 2020 that federal protections were put in place to prevent housing discrimination based on gender identity, making it harder for them to find affordable housing. These factors can combine to put nonbinary individuals in greater debt than men or women.

Credit scores

The Federal Reserve analyzed the credit scores of thousands of men and women from 2007-2017. They found that among men and women of similar ages, men and women have nearly identical credit scores, but the average man’s score is slightly higher.

There is no robust data yet differentiating the credit scores of nonbinary individuals.

Spending

Spending tends to be closely correlated with income, with higher earners spending more.

The Bureau of Labor Statistics, in their Consumer Expenditure survey for 2021, found that the average single woman earned $39,178 and spent $38,838, while the average single male earned $49,525 and spent $41,203. The breakdown of spending by category is shown below.

Cost of living, family size, and other factors all play a role in income and expenditures. There is also no data from the Bureau of Labor Statistics breaking down income and expenses for nonbinary individuals.

Investing

A study found that if women invested at the same rate as men, there would be more than an extra $3.22 trillion in assets under management today. They list the gender pay gap and a lack of engagement among women as key factors for this investment gap. Women can’t invest money when they don’t make enough to keep up with the cost of living today.

Borrowing

Experian compared debt balances among men and women and found that, on average:

• Men have 2% more credit card debt than women
• Men have 20% more personal loan debt than women
• Men have 16.3% more auto loan debt than women
• Men have 9.7% more mortgage debt than women
• Women have 2.7% more student loan debt than men

Do lenders consider gender when making decisions?

No, a lender cannot consider your gender or gender identity when making decisions.

The Fair Housing Act prevents discrimination in mortgage lending, specifically based on race, color, national origin, religion, sex, gender identity and sexual orientation, disability, and family status.

The Equal Credit Opportunity Act prohibits discrimination in all types of lending based on race, color, national origin, sex, marital status, age, or participation in public assistance programs.

Before the Equal Credit Opportunity Act of 1974, lenders were allowed to require women to have a male co-signer before approving a loan. Before 1974, it was nearly impossible for women to build credit, buy homes, or take out loans to start a business without a man agreeing to help them. While the act did make this discrimination illegal, prejudices from this era still carry forward.

What should you do if you think you are being discriminated against financially because of your gender?

If you feel you’re being discriminated against financially because of your gender or gender identity, try to gather as much evidence as possible. Take notes and record conversations if you’re in a state that allows one-party consent for recordings. Try to keep communications to a written medium like emails for better tracking.

Once you’ve gathered your evidence, submit a complaint through the proper agency, depending on your situation:

• For housing discrimination, including mortgage lending and rental price discrimination: file a complaint through the U.S. Department of Housing and Urban Development here.
• For credit discrimination including loans, mortgages, and credit cards: file a complaint through the Consumer Financial Protection Bureau here.
• For any type of discrimination: file a report with the U.S. Department of Justice’s Civil Rights Division here.

Your state, county, or city may also have a civil rights division you can file complaints with, so it’s important to check.

Bottom line

What is or isn’t in your pants has no scientific bearing on your ability to manage money, but societal expectations and gender norms still affect your income and can pressure you to spend or borrow in a certain way. We’ve come a long way from 1974 when women couldn’t get their own credit cards and 2020 when nonbinary people could be charged more for housing, but we still have a long way to go.