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The Old Mutual Savings & Investment Monitor 2024 survey released last month revealed that although South African women, like men, are turning to multiple jobs and entrepreneurship to make ends meet, their financial outlook is more dire than that of men.
Before Covid-19, men and women had almost identical financial satisfaction and stress levels, but the pandemic hit women harder, the study shows. By 2020, women who were highly financially stressed surged to 60% and remained above 50% until 2023.
Men who were highly stressed shifted down more rapidly from 57% in 2020 to below 50% by 2022.
Debra Slabber, portfolio specialist at Morningstar South Africa, says it’s possible to take charge of your finances and set yourself up for financial freedom with just a few easy steps.
Improve your financial literacy
Financial knowledge is power. In this information age, financial tips, how-to guides, white papers, thought leadership articles, templates, videos, podcasts, news sites (such as Daily Maverick) and books are widely available online, at little to no cost. Don’t be intimidated, just start. Your financial knowledge can be greatly improved, one article at a time.
Audit your assets and liabilities
Slabber recommends that you start by getting to grips with your own financial situation. “Set up a list of all your assets – investment accounts, property, money in the bank, etc – and make a list of all your outstanding debt, for example, what you still owe on your house, car, credit card, clothing accounts, etc. Try to pay off debt as soon as possible,” she advises.
Maintain a personal income statement
Knowing what you are spending your money on versus what you are earning monthly is crucial for financial success. Make a list of all your monthly expenses – fixed and variable – and keep track of them.
They say it takes three weeks to build a habit, so try this and soon you will pick up trends in your spending behaviour and single out unnecessary expenses.
“Consider auditing which expenses may need a refresh. For example, do you need all those subscriptions, and can you negotiate a better deal with your insurance company?” she suggests.
One of the simplest ways to set up a budget today is by using online tools. There are many free budgeting tools available online or via an app on your phone.
If the budgeting app requests permission to access your bank account, however, be cautious about what permissions you grant. Several of the bigger banks now offer budgeting capabilities via their apps, which may be more secure than using an external app.
Pay yourself first
Paying your expenses first and then trying to save what is left almost never works – particularly now, when most consumers across all income bands are battling increasing costs. If you set up a debit order for your savings, you don’t have to make much effort and you won’t miss money you never saw.
“There are many different vehicles available to save, whether you open just a simple tax-free savings account or have an emergency savings account that is easily accessible, or through a retirement product like a retirement annuity,” Slabber says.
On this point, Janice Masencamp, head of retirement fund consulting at financial advisory firm NMG Benefits, points out that starting early allows more time for your savings to grow through compound interest. “Despite immediate financial pressures, it is crucial to make retirement saving an indispensable part of your monthly budget,” she advises.
Build a circle of trust
Get a financial adviser to help you with your financial planning, getting your investments into the right products for tax efficiency and ensuring that they are suitable for your unique circumstances. Surround yourself with people you can trust and talk openly with about finances.
Masencamp warns against deferring financial decisions to your spouse or partner. “This can be detrimental. It is essential for women to participate in all financial planning aspects actively, including understanding household spending, savings, investments and the status of retirement funds.”
Read more: Running out of money every month? Here’s how to create a practical spending plan
Read more: The best two ways a young investor can start saving for retirement
Masencamp emphasises the unique challenges that many women face in retirement. “Many view retirement as a time to relax, but for women it often brings financial stress, especially if they are retiring early or caring for an elderly spouse.
“A comprehensive retirement plan and a disciplined savings regime are crucial to ensure sufficient retirement funding without having to continue working part-time or having to rely on friends and relatives.” DM
This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.
