The subject of women and money is complex. It is a sad reality that even millennial women are still lagging behind their male counterparts regarding management of personal finances.
While it is true that there are many moving stories about single women who have successfully navigated some of the most difficult financial situations on the backdrop of women empowerment, most newly single women still encounter a financial shock once they find themselves alone without a spouse or partner.
The African nature of letting the man take the lead is still prevalent without prejudice to the level of women’s education. That has to change.
A 2017 study dubbed “Women and Financial Wellness: Beyond the Bottom Line” which was conducted on women of different nationalities by a company called Age Wave found that about 63% of women aged between 18 and 29 say financial planning is too complicated to even think about.
Another 2018 report by Enwealth Financial Services established that only 46% of millennial women are confident in investing and often fail to understand risks associated with investment such as interest rates and liquidity risks.
The report titled “Retirement Confidence report” released in partnership with Strathmore University further established that for many married women, retirement savings was based primarily and exclusively on husband’s earnings. It also noted that women’s confidence is strongly and positively associated with receiving advice from partners.
This indicates that many women prefer to let their male partners take the lead in handling the family’s finances beyond paying bills. But in the event of divorce or death of their partner, such women usually end up traumatized on many levels.
Besides rebuilding their lives, the biggest challenge becomes getting a grip on their finances which includes figuring out their sources of income, sustaining their lifestyle, devising a new budget as well as growing their savings.
With proper planning and smart financial moves, divorced, widowed and newly single women no longer have to be financially vulnerable or deal with challenges surrounding women and money.
Here are ways women who are financially dependent on their partners can protect themselves from being financially at risk in future:
Plan finances as if they were solo. One should always maintain positive saving behaviours like having an emergency fund, creating a pension plan, to ensure future consumption and expenses are covered.
Although some couples manage their finances jointly, it is important for both partners to actively take responsibility of their individual finances with the aim of achieving financial freedom as opposed to relying on one partner to do all the planning and decision making.
Make saving a priority. A common trend among women is that they are financial caregivers to their children, siblings or parents. In many cases they put off personal savings to settle other expenses like college fees, mortgages, annual vacations or debt.
But the three key components of financial fitness include having an emergency fund big enough to sustain an individual for up to six months, a growing savings account and a pension plan.
The idea is to ensure that whether a woman is single or in a relationship, they save at least 20% of their income to cover unexpected expenses or emergency situations without having to borrow or sell items.
Talk about money regularly with your spouse. Most women in relationships avoid having conversations about money with their partner and do not participate in long-term financial planning or investing decisions. They assume that men know more about finances which puts them at the mercy of their partner’s financial behaviours.
Failing to talk about finances with a partner not only shows a lack of trust in the relationship but also denies one an opportunity to educate themselves and to understand better their risk appetite and retirement portfolios. Both partners should be accountable for their finances by keeping track of their financial goals.
Work with a financial advisor. Finding someone trustworthy helps one take a look at their financial situation, make decisions based on their individual needs, and make sure they understand an investment before they put money into it.
It is important to seek out an expert advisor who appreciates one’s financial issues, a woman’s caregiving load, their career and money goals.
The financial advisor guarantees a holistic approach that not only focuses on investment and retirement planning advice, but also looks at budget creation, estate planning and many more.
Bancy Kaleli is a Pension Consultant at Enwealth Financial Services Limited