Women's money has to last longer
11 August 2014, 08:50
Nairobi - Women should defy statistics and take steps to secure their long-term financial independence," according to René Grobler, Investec Specialist Bank’s head of cash investments.
“There is so much information to understand and so little time to consider the options. For many women it seems easier to put their spare cash in the savings or bank account they’ve always had," said Grobler.
"However, empowering yourself financially is one of the most important things you can do, and easier than you might think.”
The Women's Institute for a Secure Retirement reports that women typically work 12 fewer years than men over their lifetime.
The poverty rate for women age 65 and older is 16%, compared with 9% for men of the same age group, according to the US Census Bureau.
In 2012, Visa conducted a study involving 2 000 women, who hold some financial decision making within their household.
The study unearthed interesting findings on their relationship to money.
One of the most prominent statistics was that less than a third of women consult a financial adviser and less than 2% were invested in direct equities.
Yet, women tend to live longer than men – which means that their money has to last that much longer.
While females are taking control of household finances, they are no more prepared to meet long-term financial goals than they were a decade ago, according to a Prudential's 2014-2015 Research Study in the US.
Only 14% of the women were feeling confident they would be able to have enough money to maintain their lifestyle in retirement.
Grobler provides tips for keeping financially fit:
Consider short, medium and long-term goals
Perhaps you are planning a holiday, or wish to sharpen your skills, put cash away for school fees or university education.
These objectives require planning and budgeting.
Create a clear picture of how you would like to use your money and then you can take action.
Get into the practice of budgeting
Start by writing down everything you spend for a month, right down to the smallest detail and at the same time, make a list of all sources of income.
The goal is, of course, to make sure that these two are balanced and to cut down expenses where you can.
With the extra cash you now have available, consider short and medium term savings products that will make your money work harder, achieving those goals sooner.
Pay yourself first
It’s a good start to promise yourself that you will deposit whatever is left at the end of the month into your savings account or investment plans.
The reality is, however, that there may not be anything left at all.
Pay towards your financial independence first. It will ensure you get into the habit of saving.
Seek professional advice
Obtain investment advice from someone who has received professional training and therefore understands how to choose products that suit your lifestyle.
Your financial adviser will also be able to help you select appropriate investment and insurance products - such as life, medical and disability cover - to suit your lifestyle.
You can re-look at these annually, as needs change over time.
Review your finances every year
It’s also important to see whether you are on track with your financial objectives.
The options available to you every year also change as well as the economy.
It is, therefore, best to ensure that you are still in a product that is ensuring you receive the best returns.
Grobler's four questions to ask when considering alternatives to save towards short-medium terms goals:
- Do you need immediate access to your funds or are you comfortable to put your money away for a fixed period? Do you need a combination of both?
- What is the interest rate that you will earn from the different products available to you and how can you maximise the returns you receive?
- Do the different options available to you charge fees or have any hidden costs? This could "eat" into your hard earned savings;
- Do you want your interest paid to you every month or added to your savings account?
If you don’t need this amount then adding it to your savings account will continue to increase your returns in the form of compound interest.
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