Women and their money: Time to take control.
Ageing parents. Divorce. Death of spouse. Boomerang children.
Life has a way of setting a new course. Women are finding themselves in roles where they must be responsible for their long-term needs and security.
Being prepared to adjust to the challenges that major life transitions present is critical. It is imperative that women receive individualised planning and investment advice based on where they are in their transition.
According to research from UBS, a global financial services provider, 85% of women manage everyday expenses of their household, but only 23% take the lead when it comes to long-term financial planning. It is therefore critical that women are either fully involved in the household financial management or depart on their own individualised planning journey to set themselves up for financial success in the future.
The reality is that many financial planners do not invest the time or energy in attempting to understand the differences in how women view wealth. While it’s not true for everyone, men tend to associate wealth with prestige or power. Women tend to associate wealth with security and peace of mind.
Women need a different approach when it comes to financial planning and investment advice. With clearness, a well-considered and developing financial plan, women can accomplish financial self-confidence, self-reliance and comfort. According to Stats SA report released in 2018, four out of 10 marriages end in divorce before their 10th anniversary. So, ultimately, relying on your partner’s financial plan alone could potentially lead to financial stress.
Clearly, there needs to be a new conversation around women taking responsibility for their financial futures and empower themselves with the necessary knowledge and skills to change and challenge the gender-based social constructs and stereotypes of women and their personal finances. In my experience, women mostly tend to be oblivious to the status of the household finances and having an honest conversation with a financial planner could eradicate hopeful expectations and turn it into a powerful discussion on wealth creation.
Let's see how you take control as a woman?
- Learn from your parents. Women need to understand where their attitudes and habits about finances come from, and where necessary, do the opposite. For example, as a young girl you may have watched your father gamble money away or spend foolishly as your mom remained quiet. This could be an inspiration for you to be more assertive in matters of the wallet.
- Be in the know. Like going to the family doctor once in a while to get your general health check done, you need to do a financial health check regularly to ensure your money is working as hard as you are.
- Set your own goals. Women need to understand what motivates them to both spend and save money. Be realistic about your needs and wants, and identify and prioritise your financial goals.
- Don’t lose sight of what you value. The financial choices we make determine what’s important. Buying the latest designer bag, for example, may sound like fun, but take a step back and think about how you want the future to look. Will making this purchase place your financial independence or retirement savings at risk?
- Insure and Invest. Once you’ve saved some money, you will want to put that money to work for you. Train your money to go forth and multiply. Your financial planner will coach you in how to make your money do what it needs to do for you to be financially independent. Also, implementing proper insurance will spare you the heartache later when the unforeseen strikes, and believe me it does!
Whether you are single, married, going through a divorce, or are widowed, financial planning should be on the top of the list of things that you need prioritise in your life. It should become as much of a routine as your trip to the gym. Financial health and fitness are just as important as your physical health and fitness.
Take good care of yourself, your finances and your budget. By empowering yourself with good financial habits now, you are much more likely to experience financial independence, financial freedom and security well into your future.
By Petri Beyers, CFP®