SA women should take back their power through financial independence
The South African Medical Research Council (MRC) reported that more women are murdered by their partner or ex-partner in South Africa than in any other country in the world. Abuse experienced by intimate partners is the most common form of violence, and the leading cause of death among South African women.
Within the South African context, financial independence for women has never been more important. Financial independence means avoiding a situation where you can’t leave an abusive relationship, a high-risk situation or simply an unhappy partnership because you don’t have the financial means to support yourself outside of your current situation.
Elize Botha, Managing Director of Old Mutual Unit Trusts says, “Achieving financial freedom and independence should be a priority for every South African woman in order to provide the financial tools to empower and protect themselves and their children. With our country’s increasing prevalence of divorce and domestic violence, coupled with the current tough economic environment, it’s critical that women feel empowered to make sound life decisions and secure their financial futures independently as well as together with their spouse or partner.”
The importance of an emergency fund
Botha believes that every women should have an emergency fund to draw from outside of their spousal or household finances. An emergency fund is not only important for women, it is essential for every household, she points out. It is a fund that you can use in unforeseen circumstances and that you can call on in short notice. “Money can become a means to facilitate an escape from an untenable or at-risk situations. Women should therefore take charge of their lives by having quick access to funds for any type of emergency. The best savings vehicles for emergency funds are, among others, seven-day call accounts, unit trusts and tax-free savings accounts.”
Building financial independence – one small step at a time
Financial independence does not happen overnight, it takes time. If you are not the main breadwinner in your household or your only source of income is from your partner , it is critical to find the means to start saving money, in your own name, and as soon as possible. If you receive a monthly allowance, try and regularly save what you can from this. Or you can ask for money as a birthday present and save that. Another option is a garage sale for any unwanted goods. “You need to save regularly even if you can only afford small amounts. Review your budget regularly and, where possible, limit your spending on luxuries to instead put some of it away,” advises Botha.
Avoid debt, don’t spend frivolously
Debt, typically in the form of personal loans and credit cards, is often used to buy consumables. Overspending and using expensive credit to buy the things you don’t need will put you into debt. “What people don’t realise is that the real secret to financial freedom is keeping your living expenses as low as possible. Constantly increasing your credit limit as your income increases only serves to keep you further away from financial freedom. A good rule of thumb is never to spend more than you earn,” said Botha.
Start investing – set realistic goals
To achieve financial freedom, you need to invest and build wealth. This means starting with an income-generating investment such as a unit trust that will grow your wealth. The aim is to generate an additional income that can at least be as great as your expenses. Saving enough money to be financially free may feel like a ‘long shot’, but the first step is always the hardest. Botha said, “Without a clear goal most people will find themselves spending rather than saving. An understanding of your intrinsic values is essential to find the resolve to achieve financial freedom. When you are working towards something that’s important, you are often more willing to work harder to reach your goal.”
Botha advises that women should arm themselves with financial knowledge or seek advice from an independent financial advisor. Do not leave or delegate financial decisions to a partner.
