The recently released 2018 Momentum/ Unisa Household Financial Wellness Index revealed that close to half of all South African households (44,15%) were ‘Financially Exposed’.
What this means is that while these households may currently enjoy relative financial stability, they are just one decision or one incident away from either being Financially Unstable or Financially Well. This would not be such a problem if we were not living in a socio-economic environment that has so many uncontrollable variables. We wake up every morning with very little certainty and many surprises from both our local environment as well as international markets. We go to sleep at night and bread costs R10, when we wake up, it’s significantly higher, which throws your entire budget out the window. Not to mention life’s little accidents like a fender-bender or a lost phone that can cost you thousands.
As a woman who enjoyed the thrills of marriage and having dual income, I never imagined that I was ever “One Decision Away” from being Financially Unstable. It was only when I found myself divorced with two young sons that I was propelled into my own self-inflicted unconscious disempowerment.
Until finances do us part
Marriage is a beautiful union that boasts many advantages. For me, one of those advantages was a partner that took care of all the big financial decisions. A decision not based on our financial contribution to household, but prehistoric gender roles that marriage often forces on us – whether consciously or subconsciously. As evolved as we are and as far as we have come in our fight for gender equality, I have observed that very little of that “fight” is displayed in our homes and how we as couples approach household financial decisions. Often, we find that women are relegated to financial decisions that include budgeting for monthly groceries, costs associated with the children and ensuring the efficient running of the household, where our partners are entrusted with the more complex and long-term financial decisions like pension provision, where we invest and how we divide our assets in our wills.
Upon further inspection of the Momentum/Unisa Financial Wellness Index, I was introduced to the concept of the Financially Knowledgeable Person. This is described as “The person who can provide the most financial information on the household.” With this definition in mind, two significant themes piqued my interest, one being: “the most financial information”. Again, using my relationship as a barometer, which is probably not the best scientific measure, I do not believe either of us could be classified as the FKP (Finanically Knowledgeable Person) in our household because the financial roles confined us into our individual spaces with limited room to manoeuvre, limiting our knowledge of each other’s space.
Secondly, the idea of “The Person”. Upon first glance one would assume that only one person has the responsibility of being financially knowledgeable, however in a household run by two reasonable human beings, this title is one that can be enjoyed and should be enjoyed by both equally. According to a study from Bringham Young University (BYU) researchers, when both partners are involved in financial decisions and processes, they're more empowered, and relationship quality and stability tend to be higher. One way of ensuring that both parties are equally involved and knowledgeable in household finances is by having an identified and documented financial system where parties enjoy interchangeable roles, which forces each individual in the union to take the same level of responsibility and always have an understanding of the financial status of the household. This is particulary important if divorce splits the family apart as each spouse will have an involved and clear idea of assets and financial responsibilities of the household – reducing instances of financial infidelity.
All the single ladies
Looking at this, one would imagine that women led households would be in a better position but alas, this is not the case. Primarily because these female-headed homes are still run by women who earn between 16% - 40% less than their male counterparts with the same responsibility, which explains the Index reporting that in comparison to male FKP households where 23, 8% of male headed households register as financially distressed, compared to the 34.6% of women headed households.
Zooming into a micro-economic level, the Index found that:
- women form 51% of the population, but earn only 36.8% of all salaries and wages,
- women, much more than men, reported feeling ‘pushed around in life’, leaving them helpless when dealing with life’s challenges, and
- women, simply put, feel less empowered than men do, which in turn affects household money matters.
Female led homes are still at a disadvantage compared to their male counterparts. In the face of ongoing remuneration discrimination, women also have to run households and care for their families.
As a single mother, it has become even more important for me to gain more control over my household’s long-term financial success. This is significant social progress, but I have also come to recognise that this is a responsibility that sits only with me.
The more you know…
It may seem like a daunting task at first, but the journey to financial success begins with upskilling yourself with knowledge, and I think we can all agree that financial literacy is the first step to financial power.
To be financially literate is simply to understand how money works when it comes to areas like personal finance, investment and budgeting. It is vital that women begin to assert themselves in the drive for financial education.
In VISA’s 2013 International Barometer of Women’s Financial Literacy, South African women ranked 23rd out of 27 countries when it came to financial literacy. Seven years down the line, and with the 2018 Momentum/Unisa Household Financial Wellness Index results in mind, I do not imagine the financial literacy situation has improved much for women in this country.
Even if the starting point is zero, nothing is ever hopeless. As women, our strength is a testament to our ability to rise up and take charge of our destinies – including our financial success.
This world is increasingly intricate and financial management only adds to the complexity, but the truth is that we do not have to pretend to know everything there is to know. We should not have to feel intimidated that we do not know or understand finances. There are plenty of affordable avenues to pursue even basic levels of financial literacy.
We are fortunate to live and thrive in the age of accessible information. With a mobile device in almost every pocket and access to the internet, acquiring financial knowledge is a search term away. This is one advantage that generations of women that came before us never had at their immediate disposal. Simply downloading the 2018 Momentum/Unisa Household Financial Wellness Index will already provide a host of tips and advice that could prove invaluable.
Don’t underestimate the value of professional advice. With an intricate understanding of the financial world, a qualified financial adviser can prepare you for the realities that your household experiences on a daily and long-term basis, especially when times get tough. As experts in their field, they can help you ask the right questions, set the right goals and lay the foundations to achieving financial success.
Even one session can change the course of your financial destiny, making this an invaluable endeavour. Personally, I know that our financial advisers at Momentum would appreciate seeing more women taking control of their household finances, especially since we know that women are generally in charge of running their households!
In the end, regardless of your financial circumstances, you can and should strive towards becoming a Financially Knowledgeable Person. Perhaps the most important piece of advice I can give another woman is to always remember that you can be in charge and can steer the course of your journey to success.