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ZANELE KUNENE: Women, let's shift focus to the barriers in our control

Financial independence requires intention, consistency and walking the talk

It may take another century to fix the gender pay gap, so we women need to draw our focus on the other barriers that are in our control.

Picture: 123RF/AMMENTORP
Picture: 123RF/AMMENTORP

Fighting for financial independence as women under a history of inequality in earning power is the biggest barrier to our potential for creating wealth.

Zanele Kunene
Zanele Kunene

It may take another century to fix the wage gap, so we need to draw our focus on the other barriers that are in our control. Consistency and being open to the existing support structures will pull us in the right direction.

No clearly defined goals 

Women tend to save more than men do, however, our attitude towards actively engaging with our finances is quite low. It’s not just about putting money away but asking ourselves “I’m I building enough savings to provide for 25 years after retirement?”

Setting an expectation or goal on your savings, plus using a suitable investment vehicle places you a step closer to financial independence. Reviewing your investments regularly helps you adjust your investment portfolio for unexpected life events and also to apply any new tax legislation that may benefit you. 

Holding too much cash

Break away from swelling up your bank account savings if you’ve built enough emergency reserves for the next six months. There are other investment vehicles that you could consider to build and grow wealth such as unit trusts, tax-free savings, direct shares, or a retirement annuity, which hold a host of real-time benefits for you.

For example, contributing to a retirement annuity or retirement fund provides you with a tax deduction, limited to the lesser of 27.5% of your taxable income or R350,000.

Lower financial confidence

Our investment style is more cautious than men, which has subsequently decreased the opportunity of growth in our investment portfolio. Financial literacy seems to be the key factor in women having lower financial confidence, which leads us to be less open to risk. Do some homework as to which investment vehicle is suitable for your needs and which accompanying fund will help you reach your financial goal. 

Short-term planning

We are usually the go-to person when family and friends need help so we have taught ourselves to prepare for unexpected short-term needs. By focusing on short-term needs such as the family Christmas party or solely focusing on current household expenses we delay saving for our retirement. Start an investment with a small amount to build the habit of contributing positively to your future. 

Only having one budget plan

Both men and women are guilty of only having one budget plan, you need to have three budgets; one to manage current expenses, another in case of a critical illness, and yet another that caters to the death of your partner. Ensure that you and your partner have sufficient risk cover so that you are financially protected from the devastation of such life events.

Longer life expectancy

We tend to live longer than men so there is a high chance that in retirement you will be handling your finances alone. In recent years there has been an increase in post-retirement divorce, so you need to know how to manage your finances.

Estate planning for you and your partner is key, as it will ensure that the household’s expenses are taken care of. There have been far too many cases of widows that are forced to sell their homes just to meet the living costs. Begin by drawing up a will and consulting with a trusted adviser to put together an estate plan.

A slow increase in earning capacity 

With the growing amount of women starting their own business, we have noticed that many of them delay saving to invest in the business, hoping that its success will take care of their finances. This behaviour steals valuable time, so start the habit of saving.

The nurturer inside of us pulls us to help our family and friends over ourselves. By investing in our health, career development and education we increase our earning capacity.

Financial independence requires us to be intentional, consistent and active in this journey.

* Kunene is an Associate Financial Planner professional at BDO South Africa