New Year, New (Financial) You!

All you know about money is that there’s just never enough, right? Let’s change that, starting right now. Here’s our expert’s 10-point plan.

Anna Rich

1. Take responsibility!

It’s been just 33 years since marital power was abolished in SA. Before 1984, if a couple were married in community of property, the husband had legal control of both his own property and his wife’s! She couldn’t enter into a contract (not even to open a bank account), write a will or sell an asset without his permission. So it’s no surprise that many older women haven’t taken responsibility for their finances.

Though most women find themselves solely responsible for their finances at some point in their lives, many of us still allow our husbands or partners to manage (or mismanage) our finances and retirement planning – sometimes with disastrous consequences.

The 2017 Wage Indicator shows that the average gross monthly wage for SA men is R18 824, and for women, R13 229 – a pay gap of about 30%. This also means our pension fund contributions are lower and our bonuses are proportionately smaller, as are the levels of group life, disability and income protection cover. We also tend to live longer than men, and our careers are often interrupted during our childbearing years. Research shows women typically have one-third less set aside for retirement than men.

So take full responsibility for your journey to financial empowerment, and change your spending habits. We need to stop the ‘retail therapy’ thinking, and start talking about wealth building as a true form of liberation. No number of stilettos will make us financially empowered. Most crucially, we need to teach our daughters that too.

2. Educate yourself

There are plenty of great books and blogs on personal finances. Your knowledge will help you make better decisions. And if you partner with an independent financial planner, you will make decisions from a position of strength.

3. The B word

Keep track of your expenses to make sure you spend less than you earn. That ‘profit margin’ at the end of each month is what you use to build wealth and ultimately achieve financial freedom.

But many South Africans spend more than they earn, which inhibits wealth-building. About 25% of household income goes towards rent or a bond, about 15% on food, about 8% on utilities, about 6% on healthcare and medical aid and about 4% on clothing. Retirement savings are at about 12% – which is too low.