A purse of your own

It is a well-known fact that women usually outlive their spouses and because of this, they will at some stage have to take control of their finances. However, is waiting for a devastating event to happen in your life a better option rather than actually k

Having a ‘purse of your own’ is not to advocate that you need have secret accounts, but to rather enable yourself to own your life through the knowledge of what is happening with your own affairs and being in control of them – ultimately letting your money work for you. As women, we need to understand how much money we have available to us and if there will be a sustaining amount left upon retirement; factoring in where and how our money is being spent and on what investments and expenses you are currently paying for. “If you don’t have a financial plan in place, it is best you start sooner rather than. But with so many different sources available, where or who do you turn to for advice? A suggested way in which to find a reputable financial planner is through word of mouth. Ask around and let colleagues, friends and family help guide you. Remember that there is no one-fit for everyone and what works for them, may not necessarily work for you, but it is a good starting point. Find someone whom they have been dealing with for some time and most importantly someone that they trust,” says Michelle Human, legal specialist consultant at Liberty. “The web can also be a valuable source of information and you can contact organisations such as the FPI at http://www.fpi.co.za/ which will provide you with all of their affiliated financial advisers.” Some tips for women to own their financial purses: · Do a comprehensive financial needs analysis

Once you feel comfortable with your financial adviser, the first step will be to conduct a thorough financial needs analysis. This will involve discussing your financial needs and goals, particularly in the event of death, disability and retirement.

You will need to give the financial adviser a good idea of where you stand currently in relation to these goals so that any gaps can be addressed. Make sure that you provide information such as existing policy information, your group benefits provided by your employer, current will and information relating to your income.

• Until death us do part...make or revise your will

No one likes to think about one’s own demise or the passing of a loved one, but planning for such events, does provide some comfort or at the very least ease the worst of a bad situation. So take control of the inevitable and ensure that your will is up to date as this is the only way that you will have any say in what will happen to your belongings when you pass. It can also save costs and make sure that there is no delay in winding up your estate.

• Losing a loved one...what happens to your dependants if you pass away

Life cover can play an important role in your financial plan. Consider using your life cover to provide for your dependants such as your spouse and/or children, paying off your bond or other debts and covering any estate duty or other costs arising from your death. Ultimately it ensures that any debts you may have can be settled and ensures that your dependents are not left with any unnecessary surprises.

• What about me?

Being diagnosed with a critical illness can be a life changing event, which can have enormous financial implications. By having comprehensive critical illness cover you can make sure that you can afford the best possible care and hopefully recover without facing financial ruin. Bear in mind that critical illness cover is designed to assist with the costs associated with the impact that the diagnosis has on your lifestyle. These costs may not seem like a big deal initially, but they can add up to a large sum very quickly.

In 2010 Liberty paid a total of R281.2 million in critical illness protection claims. 41% of these claims related to a cancer diagnosis. So the premise that it will never happen to you, just doesn’t hold any water. Make sure that your financial plan includes sufficient critical illness cover to make sure that your lifestyle is not affected by such a diagnosis.

• Disability

Becoming disabled can be devastating in so many ways. In some ways, your ability to earn an income in the future could be regarded as your greatest asset, especially if you are young, well qualified and skilled.

Make sure that you consider what would happen financially if you were disabled either temporarily or permanently. Perhaps you would need a lump sum initially to meet expenses not covered by your medical aid and set up an environment to cater for your disability. Your long term need, may be to replace your income on a monthly basis. Having a plan to cater for these needs, at least makes sure that you don’t have to worry about the financial implications of any disability.

· Pay yourself first... Retirement always seems such a long way off, but it is funny how it can creep up on you. How many pay days do you have left until retirement? Consider this, a woman of 40, planning to retire at age 60 and with a life expectancy of 75 years. She has 240 pay days left to save for retirement. Sounds like a long time, until you realise that these 240 pay days need to provide them with sufficient income to provide for 180 pay days in retirement! Thanks to medical technology, we are able to live longer, which means that we need to realistically consider that our retirement years may last longer than we initially expected. Have we saved enough to last this long? Have we considered the impact of stock market crashes, higher than expected inflation and possible job losses along the way? Make sure that your retirement plan is robust enough to weather the challenges that it may face. · Pennywise...saving for a future goal

The definition of saving is simple, it is money that you put away for a specified period and is not spent in the interim. But in order to really see a sound return you need to take it further than just saving - you need to invest. Bear in mind that your investment needs to outperform inflation so that you are earning a real return. The rule of 72 says that if inflation averages at 10% over the period of your investment, your buying power halves every seven years!

Make sure that your investment suits your risk profile. If you are younger you may be willing to invest for a longer period, be more aggressive and willing to take on more risk. However the older investor may want to be more conservative and prioritise capital preservation.