#Women’sMonth: 4 tips to financial independence
Many women still battle with getting to grips with financial matters.
Lindiwe Miyambu, African Bank’s group executive: Human Capital, said today’s modern woman is expected to be independent in all matters, especially those relating to money.
Unfortunately, she added, many women still battle with getting to grips with financial matters and there is still a fairly large Confidence Gap – the measure of a woman’s confidence in her ability to attain her financial goals.
In a global study by Prudential, it showed that only 14 per cent of women were very confident they will meet that goal, and just 20 per cent said they felt prepared to make smart money moves. Miyambu said in South Africa that percentage may be even lower.
She offered four useful tips for the modern woman to keep ahead and stay financially sharp:
1. Don’t rely on others for your financial security. Handing control of your finances to someone else is a sure way to lose track of them. Make sure you educate yourself about basic financial management and investment. Invest in self-help books and follow finance gurus on social media for some useful hints and tips.
Read: Vanessa Govender will inspire this Women’s Day
2. Consider investing as part of a broader financial plan. While investing early and often can help anyone in their 20’s begin building wealth, that doesn’t mean investing is the answer to every problem. Some graduates may still have student loans to pay off and may be just spread too financially thin to even think about investing. In this case the best thing to do is carefully monitor your spending habits and make savings and budgeting part of your daily routine until you are more financially stable. Really look out for the best ways to grow your saving. No amount is too little to put away to start teaching yourself how to save.
3. Unleash the power of compound interest by investing early. There is no doubt that compound interest is the most powerful force in the universe. When you’re in your 20’s, it’s easy to think you have a lot of time to get your financial life together. Unfortunately, waiting can make a world of difference. If you for example invested just R5 000 per annum starting at age 20 and continued until you were 60 at an annual interest rate of 10.75 per cent you would have R2 716 043 in your bank account. If you only started when you were 30 this amount would only be R948 604. It shows that by missing out on those 10 years you have actually cost yourself more than R1 767 439 in returns, even though you only skipped ten years of deposits. That’s the beauty of compound growth.
4. Realise that money is a tool. If you’re in your 20’s and ready to build wealth, it all starts with recognising the money you earn is nothing more than a tool to make smart choices regarding spending, savings and investing. Learning to become a diligent saver and investor early on is the key to being able to live the life you desire. You need to remember that while you’re trading your time for money today, in the future you will be able to use your money to give you the time to do more of the things that really matter in life.
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