What power do women have over finances?

Women planning for retirement

Yvette Harris, Principal Consultant at Simeka Consultants and Actuaries.

On average women tend to outlive men by up to seven to ten years, according to the World Health Organisation (WHO); additionally they have longer breaks away from work due to maternity leave and generally earn 15% to 17% less than their male counterparts. All these factors impact a woman’s ability to save effectively for retirement, says Yvette Harris, Principal Consultant at Simeka Consultants and Actuaries.

In South Africa, statistics point to a steady increase in the number of divorces, resulting in more women and single mothers having to provide for their family’s needs in the absence of sufficient maintenance income, while contending with rising costs of living with limited resources.

Harris says these factors can have a direct impact on women and their efforts to save for a comfortable retirement.

On the up side, she adds, “Women generally have a better sense of living expenses and what the monthly budget can and can’t buy. However, sadly, very few women have a long-term view of money in relation to building their assets and saving for retirement – it is getting better but we have a long way to go. To help change this, women need to take control of their investments, educate themselves and empower one another – especially when it comes to retirement savings.”

Harris says that there are intermediaries such as brokers and trustees who understand the added burden placed on women when it comes to financial planning and saving – and can assist.

“Qualified financial advisers can and should help educate women on the balance between short-term spending and long-term investments and the significance of being financially independent,” she notes.

Mothers play a pivotal role in introducing the next generation to the importance of managing money well.

Encouragingly, the 2016 Sanlam BENCHMARK Survey found that many South Africans learn the value of money from their mothers. “Growing up, I watched my mother manage our household’s finances. We didn’t have much and so she had to be savvy. This taught me the value of a rand,” says Megan Kelly Botha, an editor and online columnist.

“Mothers are the teachers and emotional leaders of the household. It is often the mother of the family that has the greatest influence on the development of a child in helping her to become an ethical, able, resilient and moral human being. Mothers do not only nurture and teach their children, but they are also constantly empowering them with the knowledge to operate efficiently when they are no longer there to take care of them.

Within our society, women have often been on the back foot when it comes to retirement.  To help them bridge the gap, Harris offers the following advice to women when it comes to engaging with a financial adviser or intermediary in terms of their financial and retirement planning:

  1. Social prejudices and stereotyping put women in an unpleasant position when it comes to financial issues. Women should be empowered to take control of their own finances by utilising educational opportunities to upskill their financial literacy. Additionally, women should consider the benefits of having their own bank accounts.
  2. It’s advisable for each woman to build her own contingency fund to cover for emergencies and unforeseen expenses. The size of the fund should be between three and six times her monthly salary. The fund should ideally be invested in a money market account, tax free savings or unit trust where it can earn returns.
  3. All women should be aware of the four Ds: death, disability, divorce and dependency. It’s advisable to plan for every eventuality – for example, if the female head of the household passed away or became disabled, this would affect the whole family emotionally and financially.  In terms of the other D – divorce – a financial planner can assist women to determine post-divorce costs even before they start to negotiate the settlement. Additionally, it’s important for women to build their own investment portfolios alongside their spouses to create financial inter-dependence and tax efficiencies.

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