Growthline - August 2016

Phillipa Symington Phillipa Symington

Five ways for women to make their money "work harder"

August is National Women’s Month in South Africa and we have put together a few guidelines according to issues which we come across regularly when working with our female clients (and also sometimes, working with men too!)

1.       Create your own investment portfolio

The first rule of financial security for women in relationships is to arrange a split of the joint estate in order to have assets and investment in your own name. Having your own investments which are separate from your partner’s, provides financial security for the long-term. It is vital to plan for a future that may not always go ahead as planned. Hindsight is the perfect science, but when disaster strikes, nobody wants to be left wishing.

Women who have their own assets and investments within the relationship are more likely to be independent. While this may be a difficult discussion to initiate, the sooner it takes place the better for the maturity of the relationship, as financial security is no longer a one-way conversation.

Provision should be made for financial vehicles such as shares and investments as well as property. The portfolio should also include everything that the woman has brought into the marriage (inheritances are normally excluded) and at least half of all the assets accumulated together. In short – it must be fair and equitable within the limits of the relationship.

2.      Get professional help

Financial management is not for the ill-informed and mistakes could be catastrophic.  The age old saying rings true: “She who advises herself financially has a fool for a client”. When it comes to getting the best returns for your hard-earned money it is important to consult a true expert. A reputable and knowledgeable advisor or firm can guide you through the process of wealth management to ensure that you are taken care of, in the best way, in any eventuality.

The advisor will be able to gauge your spending patterns, help you with budgeting and advise you on your savings and retirement goals, all tailored to your individual situation. Grant Thornton assists a large number of women with their financial and estate planning.

3.      Spend wisely

In a modern and uncertain economy it’s important to differentiate between wants and essentials. With costs rising all the time it’s important not to overspend on the wants, but to focus more closely on the essentials. As most women are responsible for the wellbeing of the family and therefore the “essentials” in the household spend, it is important to identify the true needs of the family.

But, we all know that differentiating between the two is easier said than done.

While I certainly do advocate for some indulgence from time to time (why not?), it should be carefully thought out and it has to be within your budget. The savings made from buying cleverly could amount to a handsome sum that could be invested into your portfolio or used to pay off debt (or even to spoil yourself!).

So take the time to plan carefully – control your debt, look out for specials or buy in bulk where possible – and you’ll ensure that you stretch those scarce Rands just that little bit further.

4.      Planning for the unplanned - saving for the future  

Many of us find it very challenging in the present economic situation to “save for a rainy day”. Never before though has it been more appropriate than now.

There are a number of unique or unplanned expenses in today’s households, such as private school fees and the related additional expenses that go with the fees. It has also become more of the norm to take care of our parents and extended families. Adult children are struggling to find jobs (even those who have been fortunate enough to obtain a university degree) – never mind to pay for education, holidays, yoga classes, babies and the like.

The extra costs place additional financial strain on the family budget, making it necessary to factor these into your financial plan.

Good financial planning, which also includes life insurance products and a savings fund can help to offset any unexpected expenses. Retirement annuities; pension funds; unit trusts and income preservation funds are just a few of the options available for savings.  Life cover is essential to assist the joint estate in the unfortunate event of your death.  Once again, consulting a good financial advisor is a must, as they can assist you to spend your money wisely in order to enjoy the benefits well into old age.

5.      Get Adequate Cover – your family needs it

What would your family need should you lose your job?

What would happen to you financially in the event of your partner’s untimely death?

How much is schooling and tertiary education going to cost you?

How would the family cope in the event of your untimely death?

These are all scenarios that we just do not want to think about, but they require detailed, future planning that can be addressed through the myriad of insurance products (life and personal) which are available in the market today. So instead of panicking - or worse still – your family going into financial meltdown, make sure that you and your family are adequately covered to ensure that you can maintain the standard of life that you have become accustomed to.

Again, consulting with a financial advisor is a must to help you find the best products that will ensure adequate cover at the best price in the various scenarios that may impact you and your family.