Most young women would love to live a carefree lifestyle filled with delicious lunches, Jimmy Choo handbags and lattes. Of course, we all know that this is not practical. Today’s modern woman is expected to be independent in all matters, especially those relating to money.
The spiralling cost of living means many young women literally end up living from pay cheque to pay cheque. Mellony Ramalho, African Bank’s Group Executive: Sales, Branch Network, says ideally you need to find a way that you can still live well today, while finding a way to save and invest for tomorrow. She says unfortunately many women still battle with getting to grips with financial matters and there is still a fairly large Confidence Gap – the measure of a women’s confidence in her ability to attain her financial goals.
In a global study by Prudential, it showed that while 75% of the 1 407 American women (age 25 to 68) polled said having enough money to maintain their lifestyle throughout retirement was very important, only 14% were very confident they will meet that goal. And just 20% said they felt prepared to make smart money moves. Ramalho says in South Africa that percentage may be even lower. She cites another study by Merrill Lynch where it shows that although 77% of women want to be involved in day-to-day investment decisions, 72% say they ‘know less than the average investor’ about investing in general.
Ramalho says gaining confidence in financial decision making all starts with the basics. She offers four useful tips for the modern woman to keep ahead and stay financially sharp.
1. Don’t rely on others for your financial security. Handing control of your finances to someone else is a sure way to lose track of them. Make sure you educate yourself about basic financial management and investment. For example, you
should always be clear about what your interest rates are and if you have investment accounts you should be informed about how they are performing.
2. Set yourself goals to strive towards and stick to them. If you want to take your long-awaited holiday but just can’t afford it, set a manageable monthly goal. Saving is a lot easier in small chunks. Saving money in a tax-free investment account, for example, is a great way to accumulate savings in a tax-efficient way.
3. Be responsible when applying for credit. Spending less than you earn seems like a straightforward concept, but a lot of people spend far beyond their means. If something happens to your source of income, this can leave you trapped in a debt cycle. If you find yourself in a tight financial spot, consolidation loans can help you regain financial stability. They are used to simplify your credit, by addressing multiple debts, and merging them into a single cost-effective payment that you can settle.
4. Be wary of taking on the responsibility of your partner’s debt. Sharing your debt can keep you from making financial headway as a couple. Prenuptial agreements are a way to protect you from debt cycles. A good way to make sure you and your partner are financially safe is by taking the option of credit life cover which will help to insure you both so that you are able to meet your credit obligations should something unforeseen happen.
“Remember that your financial identity is part and parcel of your existence and that keeping ahead of your finances is a great way to maintain or establish your independence. These tips should help you understand and establish the building blocks of financial knowhow,” concludes Ramalho.