4 ways women can empower themselves financially

It’s not easy being a women in modern-day South Africa. According to the World Economic Forum (WEF), the gender pay gap in South Africa is estimated to be between 15%-17% on average. To catch up what a man earns in a year, a woman has to work about 14 months to earn the equivalent salary.

The gender pay gap

“For this reason women often bear the brunt of an economic downturn, as rising living costs increase the pressure on budgets and make it harder to get out and stay out of debt,” says John Manyike, head of financial education at Old Mutual.

The 2017 Old Mutual Savings & Investment Monitor (OMSIM) indicates that more than half (52%) of metro working individuals surveyed said that their income hasn’t covered their monthly expenses at least once over the past year.

The balance is currently not tipped in women’s favour and there’s clearly a lot that needs to be done to create more equality between men and women. But that doesn’t mean that women can’t make their own changes to improve their financial health.

Here are four things you can do today to sort out your money issues

1.Budgeting is the answer

While budgeting seems an obvious thing to do, the more common reasoning many people, including women have is believing it’s necessary to ask for a raise or to find other ways to earn a living. However, this is not always realistic. “Taking on a second job can help to reduce the pressure, but with the unemployment rate in the country currently sitting just under 28%, it’s not that easy to secure a steady source of additional income. Even if you do, the best and most sustainable solution to your financial worries is to budget efficiently,” explains Manyike.

If you find managing your finances daunting, make use of the free online tools available such as 22Seven or Nedbank’s MyFinancialLife, or speak to an accredited financial adviser. (For more on how to budget effectively scroll down below).

2. Tell family ‘no’

At a recent women’s roundtable breakfast hosted by Liberty the issues surrounding ‘black tax’ and the dependency that family members have on individuals that have become successful and whom they may have supported in the past was discussed.

While many working, middle class women may feel obligated to help out parents, siblings or other family members that are struggling, this may be hurting all parties involved in the long run. Some women have family responsibilities that prevent them from saving or investing money. “Empower your family, siblings or extended relatives by encouraging them or helping them find various opportunities to help them generate their own income from various sources, instead of enabling the dependency,” says Boitumelo Mothoagae, financial adviser form Liberty.

3. Organise a will

Death is often the last things on our minds. Women in particular may be so caught up in keeping the family that they may forget the most important thing to do which is to leave a Last Will and Testament. “Keep all your policies and important documentation in a life file and let someone you trust know where it is kept,” said Faeeza Khan, legal specialist at Liberty.

While you may be juggling the challenges of work and family, this Women’s Month, take a moment to revisit your personal well-being including your personal financial situation, regardless of your financial status.

4. Ensure you have enough to retire on

Financial vulnerability is one of the greatest challenges women face today. A woman’s life expectancy is three to four years longer than a man’s, and women typically marry husbands who are three to four years older than themselves. Not only can women expect to grow old alone, but most will also run out of retirement savings before they die. 

Just South Africa is a specialist retirement income company recently illustrated how a couple’s income could change in retirement following a husband’s death. It showed that if a couple were to invest R1m in a living annuity at retirement when the male is age 65 and the female 61 and draw R55 000 per annum (and increase this with inflation each year, assuming that they earn CPI + 3% each year after all charges) that they would only be able to maintain this for around 18 years, which is the husband’s life expectancy. The surviving widow is expected to live a further eight years, during which time she will see her real income fall to R15 000. 

This is why it’s key to ensure you have enough to retire on and to speak to a financial advisor to get your finances in order for your golden years.

How to draw up an effective budget:

• Find ways of bringing down your expenses. For example, instead of ordering lunch every day, why not bring your own lunch from home?
• Scrutinise your bank accounts on a weekly basis – be on the lookout for any extra costs, unusual fees and double charges.
• Make sure you are aware of all debits and credits on your account and that they are accounted for. If you forget to pay a bill, you will be charged interest – so diarise when your bills are due, and check that payment has gone through.
• Compare your receipts against your monthly statements – this will enable you to understand your spending habits, which in turn will indicate where you can cut spending.
• Make a note of all the items you need to buy and how much they will cost you. Ensure the list is complete, then stick to it.
• Know when to stop. When you’ve got everything on your list, it’s time to stop shopping.
• Compare prices - especially if you have a large family.
• Avoid expensive brands if you can’t afford them.
• Don’t compete with friends or neighbours, this could damage your financial wellbeing.

“Remember that staying out of debt and becoming financially fit is one of the most empowering favours you can do for yourself and your family,” Manyike says.