In celebration of Women’s Day, Mapalo Makhu looks at nine steps a woman should take to be financially independent
Financial independence for women is not a luxury, but a necessity. Instead of being intimidated by managing money, women should feel empowered to take control of their finances.
Women live longer than men by at least five years, and a study done by PwC shows that South African women are consistently paid less than their male counterparts.
Coupled with this is the fact that women delay long-term savings, which is a recipe for financial disaster!
It is now more important than ever for women to take charge of their finances and claim their power. In celebration of Women’s Day, here are nine habits of financially savvy women to help you claim back your financial independence:
1. SHE BUDGETS THREE TO SIX MONTHS IN ADVANCE
Yes, you read that right! Three to six months in advance. Why? Because there are birthday celebrations, anniversaries, school excursions and holidays throughout the year that you need to budget for. Think about it, for businesses to thrive and meet their cash-flow needs, they forecast (budget) their expenditure well ahead of time. So should you. Off course the budget won’t be spot-on but it will give you a good sense of what you should plan for financially.
2. SHE HAS A PLAN TO PAY OFF DEBT
There is nothing that derails financial success like debt. Debt costs a lot of money. Without credit card debt, personal loans and overdrafts, you will have more disposable money to put towards savings and investments. Come up with a plan on how you will pay off your debt and resolve to stay debt-free.
3. SHE IS HONEST WITH HER FINANCIAL JOURNEY
Ignorance is not bliss. First, you have to be honest with yourself about where you are financially, what your priorities are and what financial goal(s) you are earnestly working towards. Be honest with those around you, including your partner, family and friends.
Don’t be afraid to let your family and friends know that you are working on your financial goals. This could mean that you will be unable to buy birthday gifts or go on family vacations.
A year of sacrifice can make a big difference in your financial future.
4. SHE FINDS ADDITIONAL SOURCES OF INCOME
Whether it is negotiating a salary increase or turning a hobby into a home-based business that provides extra income, an additional source of income has become a necessity. And instead of letting lifestyle creep takeover, the newfound income is intentionally used to either pay off debt or to start investing.
5. SHE PLANS FOR RETIREMENT
Because on average women live longer than men, this means women need money for longer in their retirement years. A wise move is to start saving towards retirement as soon as you start working. But even more importantly, don’t cash in your retirement fund when changing employers.
6. SHE MANAGES HER RISK
A few major insurance companies have released their annual claims statistics and so far the trend is alarming. More and more people are surviving dreaded diseases.
This is due to medical interventions and early detection. However, a dreaded disease can disrupt your whole financial system if you are not properly insured.
Be sure not to just have life cover, include living benefits to your policies too.
7. SHE HAS A SOLID PLAN TO CREATE WEALTH
I find that a lot of people are in trouble financially and continue this trend when it comes to their finances because they have an “ostrich attitude”.
They know their finances are not in good shape, they know they should do something about it, but because they feel overwhelmed, they bury their heads in the sand and hope somehow the problem will go away!
This approach never works, whether you are dealing with financial issues, or any other challenges in life.
A financially savvy woman knows her net worth and works diligently to increase it through the following:
- Has a plan to eliminate debt
- Has a budget and sticks to it
- Does not ignore saving for retirement because it looks like it’s far off
- Has an emergency fund
- Has set financial success as a goal
- Has short-term savings and long-term investments
8. SHE INVESTS TIME TO EDUCATE HERSELF ABOUT MONEY
I say it all the time, for you to become more confident when it comes to money, you have to educate yourself. You cannot leave your financial education to chance or to your partner. It is so empowering to approach a financial institution well equipped with knowledge rather than to depend on them to give you the right information.
I cannot say it enough. Educate yourself, educate yourself and educate yourself!
9. SHE NEVER LIVES A CHAMPAGNE LIFESTYLE ON A BEER BUDGET
She will not go broke trying to look rich! She understands that true financial freedom is worth the sacrifice. She does not support an expensive lifestyle through credit.
She earns her money, invests it and only then does she live it up.
Having money and building wealth create a sense of peace while living beyond your means is a sure way to cause you stress. Give yourself peace of mind this Women’s Day by resolving to be financially successful.