Text: Amanda Ndlangisa. Pictures; Thinkstock. Article from the October 2013 issue of Bona Magazine.
Women are taking the world by storm but struggle to manage our money? BONA looks deeper
Despite the empowerment we as women have had in recent years, money and the management of it seems to be a struggle. We asked Head of Retention and Financial Adviser, Boitumelo Mothoagae and Legal Marketing Specialist, Michelle Human from Liberty, to give us their expert opinion on money matters.
Why women are bad with money
Michelle explains that traditionally, female responsibilities were focused on the family and its wellbeing. For this reason, we have shied away from money matters, passing the buck to our husbands. Society has changed and we must be willing to educate ourselves about financial management.
Another reason why we depend on our partners or spouses to take care of us financially is that we often leave work mid-career to raise a family. This means that with fewer working years our pension/provident investment will be worthless when we reach retirement age. We also tend to put others’ needs before our own. While this is not a bad thing, we need to take the necessary steps to actively manage our own finances in order to avoid becoming a burden later on in life.
Therefore, don’t assume that your father/husband/brother knows best, do it for yourself and stay actively involved throughout your financial journey.
I’m just not a numbers person
More often than not, we think we are not a numbers person but it’s because we have not had access to the right tools or concepts have not been explained to us correctly. If something is not clear contact your financial planner and ask the questions that you want answered. If more women did this, they would be surprised at how easy working with numbers can be.
Keeping up with the Kunenes
Boitumelo reveals that 42% of all women lack financial security and only 6% are “very confident” in their ability to retire comfortably. With these stats in mind it’s time to stop spending on the, ‘latest and best’ to impress your friends and turn your attention to the big ‘M’ – Money! It’s so important to plan every purchase and budget for everything you spend. Be careful of sales; rather shop around for the best deals and don’t buy the first thing you see. The golden rule is don’t shop or spend money when you’re unhappy or to make yourself feel better.
Moms and money
The experts from Liberty also advise that as a mom, you are not just responsible for yourself, but for your kids too. Be sure to put plans in place to protect your family against any of life’s ups and downs. There are many savings products available and the earlier you start the more you benefit from compound growth (a measure of how much something grew on average, per year). For example, if you save R200 a month for seven years you would have contributed R16 800. If the investment grew at 10% a year, your total return would be R24 800, which means R8 000 of your child’s education would be paid for by growth. The best way to start saving is to set up a debit order at the beginning of the month and think of the deduction as compulsory.
- Education plan: There are education plans such as Liberty’s Education Builder. These are structured as awards so you would be committing to save for a specific period of time, usually five or 10 years.
- Cash: If you are planning on only saving for a year or two then you should consider cashlike investments like the RSA Retail Bond or a fixed income unit trust.
- Make a Will: A Will is a good way to choose guardians for your children if you are one day no longer around, as well as who will manage your money and assets.
- Life cover: Life cover can be used to pay off any outstanding debts you may have which will put your family in a position to survive without you. If you depend on your husband’s income, he should have life cover too so you can pay off any debts you produced as a family if he passes.
When men control the money at home
Many of us rely on our husbands/ partners for financial security. This can be very dangerous as life may change and suddenly you’re faced with financial responsibility. Grieving for your husband while trying to arrange with your bank not to repossess your home which hasn’t been paid, or realising that your joint bank account has been frozen, is something no one wants to face. It is important you have a good understanding of your family finances and to have your own bank account. Having your own financial plan and savings pot is non-negotiable.
It is time to do things differently
Saving money is like losing weight. If you want it done as fast as possible you need to realise that saving is part of an overall financial plan, which should include other positive financial habits such as correct budgeting; counseling so that you can start good financial planning and most importantly self-control. Don’t be fooled by sales and specials being offered by retailers, instead save your money.
Kiss: Keep it simple sexy
- Try to buy only what you can afford and avoid getting into debt by buying on credit. In addition to paying back your debt, you’ll also end up paying initiation fees as outlined by the NCA (National Credit Act). So you’ll end up paying more than you budgeted for.
- Look into your bank charges. Compare what you’re paying with what other banks are offering. You can save a lot with the right account for your individual needs.
- Keep a budget with all your income and expenses written down, and stick to it. Cut out the luxuries and stick to the necessities. Use your credit, debit and store cards cautiously. If you’re already deeply in debt, go for debt counseling so that you can start paying it off and get rid of it.
Alexander Forbes’ Head of Retail Legal Support, Jenny Gordon, encourages women to take responsibility for their own financial planning since:
- We have a greater life expectancy than men. This means women spend a longer time in retirement and need to have saved more retirement capital.
- Retirement ages in many SA companies have been reduced from 65 to 60. If women’s life expectancy is around 83, it means that we will live more than one-third of our lives in retirement.
- Job changes can impact on our retirement savings. Make sure that when we change jobs we keep our retirement savings. Otherwise each time we start a new job we are starting all over again and have less time for compound interest to work its magic.
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