Jumpstart Women’s Month with advice for future financial success
The latest General Household report released by Statistics South Africa, shows that 41,8% of this country’s households are headed by women.
This translates to approximately 7,2 million South African females who are either the sole or the main income earners in their families. The numbers also show that this is a growing demographic.
In light of Women’s Month this August, Janine Horn, Financial Adviser at Momentum, says that there is an increasing need for females to better protect their incomes.
“Our own research suggests that women are more financially exposed than ever as a result of the pandemic. The latest Momentum | UNISA Household Financial Wellness Insights shows that women - who make up 51.1% of the South African population - were hardest hit by the lockdown. Just over a million either lost their jobs or were prevented from working.”
Given this vulnerability, she says that it is critical for women to start saving and investing as early as possible. Because when it comes to your personal finances and your financial success, building long-term wealth for your future self is prudent.
“It's critical to start saving and investing as early as possible. After all, you are entirely responsible for your financial wellness.”
With this in mind, Horn outlines the crucial steps to financial security for ladies.
Start with emergency savings
Create a savings account especially reserved for unexpected events or expenses that may crop up. As a rule, it is best to save the equivalent of at least 6 to 12 months’ salary. However, for single income households, 12 to 18 months' worth is better. This should be enough to cover you in the event of a job loss or financial crisis such as the pandemic and associated jobs losses.
Save for retirement
Nearly 50% of South Africans do not have retirement plans. In addition, many South Africans have slowed or stopped contributing to their retirement savings due to Covid-19. However, this is not an aspect of one’s savings that one can afford to fall behind on. Start investing for retirement as early as possible and take advantage of the power of compound interest.
Start a side hustle
The best financial advice for single ladies is to create multiple streams of income. Finding financial security is no longer about nailing down a job to work at for the next 30 years and retiring with a pension (although retirement savings are important!) Instead, diversifying your earnings and taking control of your own financial destiny is the only path to true financial security.
Horn says creating multiple streams of income can also boost your career, teach you new skills, and help you find personal fulfilment - especially if it involves something you are passionate about. Getting a side-job or setting up a passive income can help to set you up for financial success.
Get rid of your debt
Getting out of debt is the true path to financial freedom. One method of getting a handle on your rampant debt is to take out what is known as a debt consolidation loan. This is where you take out a single loan to pay for numerous others. This has two advantages; the monthly instalment is often less than all the smaller debt repayments combined, and the interest rate charged is often lower.
Being debt-free means you aren't throwing money away on high-interest credit card payments, and you don't owe anything other than your basic living expenses. Creating a debt payoff strategy will help you make a plan and motivate you to become debt-free.
Horn says that while it may be slightly more difficult for single-income households to build wealth, taking the right steps will get you there.
“The earlier you start with a plan of action, the more likely you are to reach your financial goals. Getting in touch with a financial adviser to map out your short- and long-term goals, will make this journey even easier,”
she concludes.
