There are many factors which can leave women financially vulnerable, divorce being only one of these.
Eloise Boezak, Head of Customer Experience at African Bank, says a common mistake many women make is to rely on their spouse for financial security and retirement planning.
But what if your marriage ends? What if your marriage contract sees you walk out with nothing? What if you are over 50 and were a stay-at-home mom all your married life? What if your spouse dies and you are not provided for in their will?
Women in these situations may take years to get back on their feet.
“A marriage partner is not a financial plan. Be in control of your finances, of what you are spending and saving and of what you own at all times. Planning for your retirement should be a priority from the day you start working,” says Boezak.
She elaborates on 5 common pitfalls which can hinder women financially in the future:
- A lack of understanding of the implications of your marriage contract (ante-nuptial or in community of property). Did you know that there is no such thing as a “common law partnership” in South Africa? Cohabitating partners have no legal duty to support each other financially during the relationship or afterwards if it should end.
- Choosing to stop work to raise your children. This is a big decision as you could lose work benefits like medical aid and pension for the period you choose to stay home. Also, there is the mental mind shift from being independent to becoming reliant on your spouse or partner for money. Ensure you are both clear on the importance of protecting your financial future if you decide to swap work title for that of stay-at-home mom.
- Neglecting to save. A nest egg needs to be nurtured and the best way to grow your money is in a high-interest savings account. Saving for the future should be as much of a priority as paying off debt. The longer you do not save money the longer you will have to work and the more you will have to save when you are older. Easy tips for saving: Set up a debit order and keep your cheque and savings accounts separate to help stop impulsive spending.
- Not budgeting. There are numerous benefits to keeping track of your monthly expenses. Not budgeting often leads to overspending on credit cards, which can lead to high debt and unnecessary stress. There are many budgeting tips online and apps to make this a simple part of your life. Soon you will be excited to check up on your spending – and can reward yourself for a good month!
- No emergency funds. When that rainy day arrives, will you have peace of mind? Life is full of unexpected events and even more so in the current Covid-19 climate – loss of income, illness and an unexpected death in the family are all part of our life now. Save for these and other emergencies by ensuring you have at least three to six months’ worth of living expenses in the bank.
Boezak concludes that it is also a good idea to invest wisely from a young age.
“There are several options which require a minimum investment and which offer good returns. Investing in a fixed deposit, notice deposit, access accumulator or into a tax-free option is a good way to set yourself up for financial freedom in the future.”