Women’s Month: 10 tips for women to handle their finances

Women often earn less than men doing the same job and are often less well-off than men in a relationship. With this in mind, it is important for women to take charge of their financial future.

Victoria Reuvers, managing director of Morningstar Investment Management SA, gives her top 10 tips for women to look after their finances: 

Know how much you spend

Set up a budget to keep track of your monthly reoccurring spending, as well as your incidental spending. Do not look at your budget as a limitation, but rather as a plan of where you need and want your money to go to work best for you. Make sure that you pay yourself first, by saving and/or investing before you spend what is left.

Ask for advice

We so easily ask and pay for advice in so many areas of our lives from people like personal trainers, doctors, coaches and electricians. The basic principle is that we either cannot do it ourselves confidently or we cannot do it ourselves at all. Asking for financial advice is no different.

You do not need to know it all

As women, we like to approach situations prepared. When it comes to your finances, you do not need to know everything. That is where your financial adviser comes in. Yes, it will serve you well to come prepared, knowing what is going on in your finances but even if you do not know where to start, simply asking for advice on how to get started is a step in the right direction.

ALSO READ: South Africans under 35 and women most likely to save

Do not let the risk of losing money be your reason not to invest

Nobody wants to lose money and any investment involves risk. You invest not to just have more money but to have enough money to pay for a non-investing related goal, such as retirement or a house. The real risk for investors is not short-term changes in the overall portfolio value but the risk of not achieving a long-term goal.

Have an emergency fund

The standard rule of thumb is to have three to six months’ worth of living expenses saved in an easy-to-access account. The key reason is that we all have unexpected expenses that crop up. If you have that buffer of cash you will not have to resort to unattractive forms of financing those unexpected costs, like going into debt.

Pay off debt as quickly as possible

It is much more rewarding earning interest on investments than having to pay interest on a loan. Rank your debts with the highest interest rate account at the top. Make minimum payments on all these debts and then throw extra cash at the balance with the highest interest rate and pay this account off first. Stick to this method until every debt is paid off.

Invest in your retirement

Numerous studies have shown that women are less prepared than men when it comes to saving for retirement. A complex set of factors contribute to the lifetime income gap between men and women. Luckily, time and compound interest can soften the gap but that means investing as early as possible and as much as you can afford to at that point in time.

ALSO READ: Creative ways to save money in challenging economic times

Continuously invest in yourself and your ability to generate an income

Whether you decide to be a stay-at-home parent or not, it is important to make sure that you invest in the most lucrative and important asset you have – your career and ability to generate an income. Keep learning – having experience to put on your resume, taking courses and increasing your skill set are important factors to continue generating income in the future.

Take your children with you on your financial journey

The sad reality is that, in most cases, children leave home without proper financial skills. Teaching your children about budgeting and savings goals will have a lasting impact on how they treat their finances.

Investing is about independence

Investing is giving the gift of independence to your future self by knowing that a little delayed gratification today will have a large impact on your future. It is about the ability to care for yourself and those you care about.

“If you set out to learn even just one thing a day about investing or improving your financial knowledge, you will set yourself up for a lifetime of knowledge and success. Financial knowledge, tips, how-to guides, whitepapers, though-leadership articles, templates, videos, podcasts and even books are widely available online, at little to no cost.

“The key is to just start and work your way up to where you are comfortable, even if that comfort simply means having the confidence to speak and ask about certain topics,” Reuvers says.