Due to the gender pay gap that is widening in South Africa, women don’t take risks with their finances.
This is according to Nowana Sobopha, a former investment analyst at Momentum Investments and the current Assistant Portfolio Manager Multi-Manager at Eskom Pension and Provident Fund.
Now is the time for women to start saving for the future and taking care of their finances as they face:
– Rising costs as the sole breadwinners of their households (a Stats SA General Household Survey of 2021 shows that 42,1% of all households were headed by women)
– Financial stress (a Money-stress Tracker survey by DebtBusters shows that 20% of women were more worried about paying their debt each month, compared to men)
Sobopha shares four lessons from her own personal financial wellness journey:
1. Retirement
Saving for retirement from as soon as they start working is critically important for women. Especially because women often earn less than men and outlive their male counterparts.
If women save enough money for retirement, then they can afford healthcare and maintain a comfortable lifestyle – even if their partners have left.
“Women should consider increasing their pension or provident fund contributions by at least a percentage point when they receive a salary increase, but they would need to speak to someone from human resources to arrange this,” Sobopha said.
2. Stop living beyond your means
Sobopha said, “I can’t say this strongly enough – everyone needs to avoid living off debt.”
A credit card should not be the answer when you want to buy something you cannot afford. Instead, save and buy the item when you have the money.
3. Over-insuring for funerals
“I don’t know about other cultures, but as a black woman, I know that funerals are very important in our families and communities. It’s culturally important to ensure that our loved ones get a 'dignified' send-off,“ Sobopha said.
“And, given the importance that is placed on such an event, funerals are usually expensive affairs because they need to accommodate (and cater for) the community at large.”
According to Sobopha, in the days leading up to a funeral, food plays a large role in comforting the family. It is considered “unAfrican” to let people leave your home without having had something eat.
With all of these costs, signing up for multiple funeral policies is often seen as a solution.
Sobopha said: “I strongly believe there is a better way to meet this cultural need than just taking out multiple funeral policies.”
"Instead of having multiple policies, put the money you would have paid towards funeral insurance premiums into an interest-bearing savings account."
Sobopha said a savings account will allow women to have access to money in the case of an emergency.
4. It doesn’t pay to be too financially conservative
“It’s good to be cautious when investing your hard-earned money – but you also need to know that you will need to take on a certain amount of risk if you want to grow your money,” Sobopha said.
The risks women take can be different at different ages. When women are young they can consider more aggressive and riskier assets because they will have time to correct their bad investments if there are any changes in the market.
For mature women, especially mothers and wives or those helping out family, the prospect of losing even a small amount of savings is incredibly stressful making the risky asset classes terrifying. This is completely understandable considering the sacrifices made to save this money.
Sobopha said, "But, if you want to realise real growth on your money, you will need to move away from thinking that all risk is bad.“
“Sometimes it pays to take a page out of a man’s book – dive right in and just believe it will work out! This is especially important if you have several years to go before retirement. Take a chance, ladies but most importantly discuss your options with a financial adviser,” Sobopha said.
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