When it comes to money, women face different challenges to men and they need to empower themselves to create their own wealth and control their financial futures.
Most women - and men - have similar financial goals. We all want to save and invest wisely so that we don’t eventually outlive our retirement savings. We plan to finance our children’s education, travel, buy a car and a home – one of the bases of wealth creation.
Creating wealth
Owning a home is the cornerstone of personal wealth for most people, because whatever you are spending on accommodation is also helping you to acquire an asset that increases in value. In addition, you can borrow most of the money needed to buy a home and retain the profit on the whole purchase price if you decide to sell.
First time buyers who earn between R3 501 and R22 000 a month have the added advantage of being able to apply for the government's Finance Linked Individual Subsidy Programme (FLISP) subsidy. This can significantly lower the cost of owning a home – an important consideration for women, who generally earn less than men in the same job which means they qualify for smaller mortgage loans.
A paid-up home also assures you of a more secure old age, and the property can be left to your heirs as a valuable inheritance, in turn providing them with a solid foundation in life.
Information is key
In 2017, 2018 and 2019 more single women in South Africa bought property than single men and even married couples, according to statistics from data company Lightstone. However, women consistently report that they feel poorly prepared to make sensible financial decisions. On the death of a husband or in the event of divorce, many women feel stranded and at the mercy of unscrupulous advisers because they have allowed themselves to become financial dummies.
This is a mistake - it’s absolutely essential to stay fully involved in all your family finances. It’s important never to take the attitude that it’s best to let the man in your life attend to all those affairs for you because you are ‘bad with figures’. Fortunately, there are many personal finance publications geared for laypeople that will help keep you informed, without having to study accounting or economics.
Life expectancy
Women live longer than men, yet we earn only about 75% of what men earn for doing the same work. Many women will have their work lives interrupted by extended periods spent caring for young children. This interrupts your career path and is one reason women are more likely to have jobs that offer more flexibility but with lower salaries.
This situation is unlikely to change, and you need to keep it in mind when planning your financial future.
Retirement planning
Although you can by law benefit from your partner's retirement policy after a divorce or death, it’s unlikely that your portion of his retirement plan will provide you with sufficient income. You need your own retirement plan, and you should never allow yourself to be talked into cashing this in to fund your partner's business - or any other venture.
Keep finances separate
For spouses or partners to run a joint bank account for all their income and expenditure is usually not a sound practice, as trying to keep track of deposits and withdrawals can lead to conflict. It’s far better to separate your financial affairs, including everything from separate cheque, savings and credit card accounts to retirement policies and ownership of assets.
It’s also important to have your own financial adviser rather than a joint adviser. This ensures that your interests will be put first, and you and your spouse can then compare notes on what is being advised.
Separate assets
There are three good reasons to list your assets in your own name:
• Divorce: In the event of a divorce there is no conflict over what is rightfully yours.
• Death: Separate assets will facilitate winding up both estates.
• Protection from creditors: If your spouse is declared bankrupt your assets cannot be claimed by creditors. The exception here would be if you stood surety for your spouse's debts or you are married in community of property.
You should be aware that you expose your assets to attack by creditors if you sign surety for your partner's debts or are married in community of property. If you do have joint assets, such as your home, you must make sure your share is correctly recorded.
Your partner's financial affairs
To ensure that you will not suddenly be the main source of support for your family, you need to establish what financial commitments your spouse has, particularly when it comes to debt. Important issues are business commitments, former spouses and other dependants, such as children.
However, if you expect him to share his financial affairs with you, you must be prepared to be open with your affairs in turn.
The future
Whether you are single, married, divorced or widowed, the same basic rules apply. No one can predict the future, so it’s essential to plan for a possible financial scenario in which you are likely to be without a partner.