Bayport Blog

Money-wise Financial Planning Tips For Women

Whether your goal is financial wellness, financial independence or financial freedom; you should have a well thought out plan to help you achieve your long-term financial objective.

According to several studies, a women is far likely to outlive a man, however the majority of women leave the financial management to their male partners, who are typically accustomed to holding onto the purse strings to take care of their woman or children, and sometimes their extended families too.

Are you really financially secure?

The reality is that many women outlive their partners and are often at a loss – not just financially – but also as far as general financial literacy, budget management and financial planning is concerned after their partner has departed.

There are also those women who believe that they have married into financial security, however with the divorce rate being so high, this truly is a false sense of security, as many end up becoming single mothers, and are faced with having to become financially independent. Even if the ex does pay regular maintenance, they are no longer the ones making the financial decisions in regards to the day-to-day financial planning or long-term financial wellbeing for their ex-wife or partner.

6 Money-wise financial planning tips every women should know

In addition to the added pressure of now having to run the household budget, a single women often takes longer to build financial wealth or financial freedom than their male counterparts, as there is already a gender payment gap that is still very much a reality.

However, there are some financially-wise actions that every women should take to ensure that she is able to secure her financial wellbeing for the long-term.

Tip 1: Commit to a personal budget

Without a personal budget you won’t know whether you have accessible money, surplus cash or even enough money to get through the month; let alone planning for long-term financial security. By keeping track of what you spend, you may be shocked when you see how much you spend on espressos, clothes or even data. These little wastages all add up and push you further away from your long-term financial goals.

Tip 2: Weigh-up discounts versus interest rates

Does it cost you more to drive to the ATM and draw cash from an ATM than it is to quickly and conveniently charge an item to your credit card? Perhaps you bought an item on sale and decided to quickly pay for it with your credit card because you don’t have cash on you; but you want to get the special deal before the bargain sale ends? Have you calculated just how much more you will end up paying on interest on your credit card? Is it perhaps more than the discount you stand to receive? And what about quickly popping out to the nearest ATM to draw cash, but the closest ATM is not the necessarily your bank’s ATM. Is it costing you more in fees than what you are saving because you aren’t drawing cash from your own bank’s ATM?

The majority of lower or middle income earning households generally don’t have a sufficient amount of emergency cash put away in the event of a sudden medical, financial or household emergency. They live from month-to-month, often having more month left at the end of their money, than more money left at the end of the month. Financial wellness means that you have enough emergency funds to support you for three to six months should something unexpected happen, such as retrenchment or illness. Whilst you may have a disability policy, or a funeral policy, there are almost always unexpected and unplanned expenses or sudden emergencies that will crop up out of the blue, which we have not planned or budget for.

Tip 3: Plan for your retirement

The sooner you begin putting some money aside for your retirement, the sooner you will start to feel closer to your goals and find a sense of financial wellness and security in the long-run. Remember that compound interest will assist you with meeting your long-term financial goals even with small contributions. While for some, retirement may seem a lifetime away, remember that every month that goes by where you are not putting something away for your retirement, means that you are robbing your future, older self of financial stability. Just as with your physical health and fitness, you dedicate resources and time to keeping your body fit and healthy in the hope that you will be healthier and fitter in your older years; so too should you be thinking about investing resources and time now into taking care of your financial health and fitness for your retirement years.

Tip 4: Emergency cash fund for a rainy day

The majority of lower or middle income earning households generally don’t have a sufficient amount of emergency cash put away in the event of a sudden medical, financial or household emergency. They live from month-to-month, often having more month left at the end of their money, than more money left at the end of the month. Financial wellness means that you have enough emergency funds to support you for three to six months should something unexpected happen, such as retrenchment or illness. Whilst you may have a disability policy, or a funeral policy, there are almost always unexpected and unplanned expenses or sudden emergencies that will crop up out of the blue, which we have not planned or budget for.

Try to put something into a savings or access bond, or even a cash investment account now already. No matter how small, start with something. But be sure to research which banks offer the best interest rate on savings and investments before you deposit your cash into an account. Also, consider putting some cash into a fixed deposit or notice account so that it can earn a higher interest rate, and then have a smaller amount of at least R10 000 (or more if you can afford) in a no-notice deposit savings account that also earns a good interest rate.

Tip 5: Financial independence means leaving your dependents debt-free

It’s all good and well you are thinking about your financial independence and retirement, but don’t forget to consider your dependents or loved ones when you are planning your finances. Be sure to put some money into a life insurance policy to cover any outstanding debts that you might still have when you eventually pass. Don’t make your financially independent lifestyle, result in financial stress and debt for your family when you are no longer around.

When you have identified how much accessible money you have through your budget planning, you can start to allocate some additional money towards paying off your debts. Add a little extra to your minimum payment every month, and continue doing until the debt is paid. When one debt is gone it should motivate you to take care of the next one.

Tip 6: Plan for getting out of debt

When you have identified how much accessible money you have through your budget planning, you can start to allocate some additional money towards paying off your debts. Add a little extra to your minimum payment every month, and continue doing until the debt is paid. When one debt is gone it should motivate you to take care of the next one.

Alternatively, consider applying for a debt consolidation loan which allows you to combine all of your smaller debts and loans into one affordable debt consolidation solution; usually with lower monthly interest rates; which means you only have to worry about paying off one credit provider rather than multiple lenders nagging you for payment. Consider a consolidation loan with a debt solution provider that also offers credit life insurance, so that your debt is covered in the unlikely event that you become retrenched or unable to pay your debt loan repayments regularly.

Whether you are single, married, going through a divorce, or are widowed, financial planning and budget management should be on the top of the list of things that you need prioritise in your life. It should become as much of a routine as your trip to the gym. Financial health and fitness is just as important as your physical health and fitness.

Take good care of yourself, your finances and your budget. By empowering yourself with good financial habits now, you are much more likely to experience financial independence, financial freedom and security well into your future.

Contact us should you wish to speak to a Bayport Financial Services consultant about a personal debt consolidation loan, or for advice on credit life insurance on your personal loan.