Financial challenges facing the modern woman

Research by the World Health Organization suggests that women could live to up to eight years longer than their male counterparts. While having greater longevity than a man may seem great, it means that our investment or retirement funds will have to last longer too. But sometimes we have to take a break from work to raise our children or care for aging parents, which means a break in income. It also means that we will have additional years to take care of our health, but healthcare is expensive. Life happens and with-it events such as divorce or death.

We therefore need to plan ahead for these circumstances, by having a structured financial plan and savings to cushion us in through these uncomfortable times. But how do we go about this?

A structured financial plan

  1. Start saving as early as possible: It is important to put money away from your very first pay cheque, as the sooner you start the better. Save more when you are able, particularly when you are young and have less responsibilities. The power of compounding growth over time is too big to ignore. If you have not started saving yet, speak to a financial adviser to put a savings plan in place as soon as possible.
  2. Make saving a priority: Have a positive attitude towards saving. When the financial concerns of the family become the primary concern, women tend to save less to meet these demands and are therefore poorly prepared for retirement. Take an active role in your own financial planning. Do not leave this up to your spouse or partner.
  3. Settle your debt: Try pay off your debts as fast as you can afford. It is normal to owe money on a car and house but pay cash as far as you can and don’t live on credit. Live within your means.
  4. Have an open discussion with your spouse. As women, we have a right to know what is going on with the family and household finances. Participate as a team and have healthy discussions about future savings and expenses. A spouse may need to reshuffle their personal finances to be able to support the whole family if there is going to be a break in service to raise children. It is vital that one does not cash in their retirement funds to be able to support them through this time. You will be taxed on amounts that you withdraw and will diminish your investments that have been put aside for retirement, which will be to your disadvantage in the years ahead.
  5. Plan for emergencies: An emergency/contingency fund will give you peace of mind that you can support yourself and will not be financially stranded. This sometimes occurs with the death of a spouse when funds are tied up and cannot be accessed readily. Furthermore, you could have unexpected medical expenses or even have to pay for mundane but necessary maintenance to your car or house.
  6. Delay retirement: Do not be tempted to retire early. Work for as long as possible even if this means working when your spouse or partner has retired.
  7. Meet with a financial adviser: This will provide you with a holistic and effective plan to provide for your needs. A financial adviser can assist in securing your future and building your wealth so that you are able to fulfil essential investment objectives that every person should have.

Mandy Porter
Alexander Forbes Financial Planning Consultants Senior Financial Planner