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Financial planning advice every woman should know

Multiple studies across the developed world, as well as the experience of microfinance companies in the most underdeveloped regions of the world, have come to the same conclusion: women manage money much better than men. This is particularly true for day-to-day money matters. The one very important area where women can and should improve is long-term financial planning. Let’s talk about that.

The first question to ask is why women should do financial planning. There are four very good reasons.

1. Women live longer than men. Many studies have confirmed this, and have tried to explain it. Some of the reasons given include that women are genetically programmed to live longer so that they can give birth and raise children and possibly grandchildren. Many women also marry men who are older than them, which makes it more possible that their partners will pass away before they do. As women are more likely to outlive men, they will need financial resources to ensure they live securely in old age.
2. Women’s careers are often more unpredictable then men’s. Having children and raising them result in long breaks from work, which can disrupt cash flows. Even if you make these decisions with your husband or partner, you have to consider their impact while planning your finances. If you plan to be a single mother, it is even more important.
3. Divorce rates are increasing. Divorces are not only an emotional strain; they can result in big financial pressures too. It is therefore hugely important that you do proper financial planning so that you can manage your finances even when times are tough.
4. Women are becoming equal contributors to household finances. More than ever, it is important for working women to start financial planning early. It will not only impact your personal wellbeing but the wellbeing of your family as well.

Now that we understand why women should take financial planning seriously, here are 10 tips to make it happen:

1. A man is not your financial plan. Please stop telling yourself that your man will take care of your finances. Even if he offers to do so, you are going to do a better job (the research tells us so!). It is a myth that men have an innate ability to work with money.
2. The first step to great financial planning is to draw up and stick to a budget. You need a clear picture of all the money flowing into and out of your household. By keeping track of your expenses, you will identify savings opportunities, and be in a position to spend your money on things that are really important to you. A budget is the difference between never having enough money and achieving your financial goals.
3. Secure yourself against unforeseen emergencies. A good place to start is by building up an emergency fund. Too many women end up trapped in unhealthy relationships or terrible jobs because they don’t have money to break free. And even if you are happy at home and at work, emergencies happen. When they do, it is far better to use your emergency fund than getting into debt.
4. If you are struggling with debt, get help. It might be as simple as negotiating different payment terms with your credit providers, or as comprehensive as debt consolidation. If you have multiple loans, a consolidation loan could be the perfect solution: instead of several payments you repay only loan every month and, if you have done your homework properly, the consolidation loan will be smaller than the sum of your multiple loans and carry a lower interest rate. As a result, your cash flow will improve immediately, giving you the money you need to balance your budget and to save.
5. Have the money talk with your husband or partner as soon as possible (the best is to have the conversation before you get married or move in together) so that you both know how money will be managed in your relationship. In this discussion, make it clear that you will be building your own wealth, in addition to what the two of you are doing together.
6. Have a proper retirement plan built with investments. Saving and investment are two different things. Don’t only save, invest as well. Saving will help you cope with rainy days, but only investments will help you live comfortably after retirement.
7. Save, and invest, as much as you can. This does not mean you cannot ever have fun or buy luxuries; it does mean that you plan for fun and luxuries and don’t just spend money because you have it. Remember the budget? The more you save and invest, the more control you have over your life – today and in the future.
8. Raising kids is not cheap. Make sure that you put money aside for your children’s education, lobola and marriage expenses, and so on. However, more important than providing for your children, is teaching them how to deal with money responsibly.
9. Keep educating yourself about money and investments – but remember that you don’t need to know everything before you can start saving and investing. In fact, you will never have all the answers. Getting started is the most important step.
10. Teach your daughters about money and how to manage it. This will give them the confidence to be their own financial hero.

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