Women, money, power

Don’t rely on someone else for your financial security.

Mothers play a pivotal role in introducing their children to finances, and good financial management, says  Karen Wentzel, Head of Annuities: Sanlam Employee Benefits.

On average women tend to outlive men, according to the World Health Organisation (WHO), often by up to ten years. They have longer breaks away from work due to maternity leave and generally earn between 15% – 17% less. All these challenges have a negative impact on a woman’s ability to save effectively for retirement. However, mothers in particular play a pivotal role in introducing the next generation to the importance of managing money well.

The 2016 Sanlam BENCHMARK Survey found that many South Africans learn the value of money from their mother. “Growing up, I watched my mother manage our household’s finances. We didn’t have much and so she had to be savvy. This taught me the value of a rand,” adds Megan Kelly Botha, an editor and online columnist.

Mothers are the teachers and emotional leaders of the household

“You may have heard the African proverb “It takes a village to raise a child”. Many people influence the development of a child as they grow to adulthood but you will agree that certain key individuals take centre stage in a child’s life at crucial times of development, helping them become ethical, able, resilient, and moral human beings. One of these critical influencers goes by the revered name ‘Mother’. Mothers do not only nurture and teach their children, but they also constantly empower them with the knowledge to operate efficiently when they are no longer there to take care of them.

“Women, generally, have a better sense of living expenses and what the monthly budget can and can’t buy. However, sadly, very few women have a long term view of money in relation to building their assets and saving for retirement. This is improving, but we have a long way to go,” says Karen Wentzel, head of annuities at Sanlam Employee Benefits.

Take control

To help change this, women need to take control of their investments, educate themselves and empower one another – especially when it comes to retirement savings.

It is here that intermediaries such as brokers and trustees should assist. “Decision-makers need to help educate women on the balance between short-term spending and long-term investments and the significance of being financially independent,” suggests Wentzel.

Women have often been on the back foot when it comes to retirement and bridging the gap.

Wentzel shares the three points women need to discuss with intermediaries in order to prepare them for retirement:  

1. Social prejudices and stereotyping put women in an unpleasant position when it comes to financial issues

Don’t rely on someone else for your financial security. It may feel like a male world, but you have a right to understand and need to find out how finances work – each woman should at least have their own bank account. Ask intermediaries what the best options are.

2. Woman should aim to build their own contingency fund to cover them in case of emergencies or unforeseen expenses

The size of the fund should be between three and six times your monthly salary. Good investment vehicles are money-market accounts, tax free savings or unit trusts which allow your investments to earn returns. Find the vehicle that is the best option for you.

3.  All women should be aware of the four Ds for their lives namely: death, disability, divorce and dependency.

Plan for the worst, as the loss of a mother affects the whole family emotionally and financially. Prepare for disability. A financial planner can help you determine post-divorce costs even before you start to negotiate the divorce settlement. Also build your own portfolio alongside your spouse to create financial inter-dependence and tax efficiencies.