Financial empowerment starts with the basics
Women must secure their futures
Changing the culture of not speaking about money is the first step in empowering women to take control of their finances.
With over half of South African households headed by women according to official stats, financial experts say women must take more control of their own financial wellbeing and planning to secure their futures.
And changing the culture of not speaking about money is the first step in empowering you to take that control, says Lindiwe Miyambu, group executive of human capital at African Bank.
“There are several unique financial risks women face that men don’t, such as income disparities, living longer, a higher chance of being a single parent and not being as aggressive when it comes to investing,” explains Gugu Sidaki, director and wealth manager at Wealth Creed.
A global study by Prudential shows that only 14% of women are confident they will meet their financial goals, while just 20% feel that they are prepared to make smart money moves. Miyambu says that percentage may be even lower in South Africa.
Sidaki says that gaining confidence in financial decision making all starts with the basics of financial literacy.
“The first step is finding out where exactly your money is going all the way to the last cent. You can do this through a budget and going through your monthly statement to assess your spending habits.” Sidaki says.
Once a budget is worked out and you have a clear picture of how you spend your money, you can then prepare your short-, medium- and long-term goals.
Your short-term savings goal should essentially be to build up an emergency fund. You can do this by keeping cash in a 32-day account or money account, medium-term savings are normally three to five years and usually involves low- to medium-risk investments, while your long-term focus would ideally be on retirement planning by investing in more growth assets, Sidaki says.
The first step [to financial freedom] is finding out where exactly your money is going all the way to the last cent.Gugu Sidaki, director and wealth manager at Wealth Creed.
Establishing an emergency fund to avoid tapping into savings for unexpected expenses is also an important step to financial freedom, with financial planners advising you hold between three- and six-months’ income in the fund.
Sidaki says it is possible to teach yourself the basics but we recommend that you seek the services of a financial adviser. “There is a financial planner out there for everyone. A financial planner helps you solidify your plan and helps you stay the course over the long term,” she advises.
However, the financial planning industry has been criticised for underservicing women and undermining their ability to understand complex financial concepts or not offering services and products that align their financial plans to their values.
“Most female investors prefer to work with a female adviser and most married women leave a male adviser after the husband has passed away. That tells us a lot about what women need, want and deserve when it comes to financial planning,” explains Sunel Veldtman, CEO and chief client strategist at Foundation Family Wealth.
Veldtman says that women want a financial planner that will really listen to their financial hopes, goals, fears and limitations and offer advice that aligns with those goals and not simply selling products.
It is also important for you to understand that some financial advisers offer financial planning services but not investment management services and vice versa. Understanding where you are and the level of services you need will assist you to ensure you pick the right planner for your needs.
“A good financial planner should also be able to explain complicated financial concepts to you without dumbing things down,” says Kim Potgieter, director and head of life planning at Chartered Wealth Solutions.
According to Potgieter, you already start forming a relationship with money by the age of seven and for your financial planner to help you meet your financial goals, tapping into what money really means to you and represents is vital.
All the experts warn that you first screen your potential financial planner by looking out for complaints, examining their track record and asking lots of questions before you hire them to help you with your finances.