Expert tips for women to keep financial goals on track
Numerous demands on your time and pockets mean that as a woman it’s easy to stray from the path to achieving your financial goals. But in anticipation of the upcoming International Women’s Day, Christelle Louw, an Advisory Partner at Citadel, offers some practical tips for avoiding common slip-ups and getting your own finances back on track.
She cautions that despite the many accomplishments that South African women are achieving as leaders and in their careers, it’s all too easy to fall prey to the dire mistake of neglecting your personal finances.
“It can be difficult to strike the right balance between caring for family and friends, meeting the demands of your career and maintaining a watchful eye over your finances,” she says.
“But the best way to guarantee that you reach your goals is to keep taking an active role in managing your family’s finances, and to regularly update your financial strategy as your circumstances change.”
She notes that as women around the world will be uniting behind the #PressforProgress campaign for International Women’s Day in recognition of continuing global gender inequality, now is the ideal time to empower yourself by taking charge of your financial well-being.
Recognising that your needs and priorities will change over time, she therefore provides a financial roadmap with a few simple tips tailored to each life-stage:
Twenties and Thirties
Women in their twenties and thirties are especially prone to losing sight of their finances as they begin families and shift their focus onto their family’s needs, says Louw.
She offers these simple tips for grabbing the reins on your finances:
Create a list of financial goals: This could include saving towards a home, a car, a child’s education or achieving financial independence in your retirement. Be as specific as possible, and ensure that you have an investment strategy in place to help you achieve your goals.
Draw up a budget: Take a hard look at your spending, prioritising repaying debt and saving towards your financial goals instead. Remember that Warren Buffet advises to invest your funds before spending, and not to spend first and then invest what is left over in your account. Aim to save at least 15% of your earnings towards your retirement as a rule of thumb, remembering that time is your investment friend owing to the compounding of returns.
Communicate with your partner: With your list of financial goals and budget in mind, make sure to discuss your individual roles and financial responsibilities with your partner towards achieving your family’s financial success.
Check your marital regime: Check whether you are married in community of property, out of community of property, or with accrual. This can have significant implications for estate purposes should you or your partner one day pass away, or should you and your partner separate.
Draw up a will: Make sure that both you and your partner have a will, as dying without a will could have severe financial, legal and emotional repercussions for loved ones left behind.
As a woman in your forties moving up in your career, one of the worst mistakes that you can make is to overspend and take on unnecessary debt in an effort to “keep up with Joneses”, instead of pursuing your individual financial goals.
At this life-stage, it is important to:
Review your finances: Keep revisiting your financial goals and strategy annually to make sure that they are still realistic. Comb over your budget to check you’re spending on needs rather than wants, and try to ensure that your lifestyle debt is low, as you may need additional cash flow to help fund children’s studies and family expenses.
Top up your savings: If you haven’t already done so, aim to create an emergency fund with at least three to six months’ living expenses as a buffer against unexpected expenses. As your salary increases, also aim to up your retirement savings to between 20% and 25% of your earnings to ensure your financial independence in retirement.
Invest wisely: It is important to invest time in yourself towards keeping happy, healthy and up-to-date in your profession. And while you deserve to reward yourself, try to invest the larger part of any bonus payments or share options towards reaching your goals instead of spending windfalls outright.
Retirement is just around the corner, which means that now is the time to check the financial support you offer family and friends against the pursuit of your own financial goals.
With this in mind, it is especially important to:
Revisit your financial strategy: Review your financial strategy individually and in conjunction with your partner to ensure that you are both protected against unexpected life events, and that you are both adequately prepared for retirement.
Prioritise your retirement savings: Make sure to save enough to provide for your comfort and financial independence in retirement by aiming to increase your retirement savings to around 30% of your earnings if possible.
Check your financial safety net: Given that medical expenses pose an increasing risk to your finances as you get older, carefully consider your medical aid cover, as well as your critical illness, life and disability cover to evaluate whether you have what you really need in case the unexpected should strike.
SIXTIES AND BEYOND
Louw emphasizes that women are generally expected to live longer than men, which means that you may need to depend on your savings for income for many years after your retirement.
She notes that your biggest risk at this stage is therefore running out of money through overspending or through moving too much of your savings portfolio into low-growth assets such as cash, which won’t deliver inflation-beating returns in the long-run.
Her advice to women in retirement is therefore:
Keep reviewing your budget: It is important to stay active and healthy with sufficient interests that you are able to enjoy your retirement, but be careful to ensure that you remain able to financially support your lifestyle.
Review your will: Make sure that your will remains up to date and that you have the appropriate fiduciary structures in place to ensure that your loved ones will be provided for according to your wishes should you pass away.
Seek financial advice: Seek objective, professional financial advice for diversifying your investments and structuring your tax efficiently, remembering that you will still likely need growth investments in your portfolio. You could also discuss simplifying your financial structures, and review whether you are adequately protected against unforeseen medical expenses and other unexpected events.
Louw emphasizes, however, that financial advice is important for women of any age.
“A professional financial advisor will be able to help you implement a tailored long-term strategy unique to your individual needs, which will help you reach your financial goals while remaining appropriately protected against life’s twists and turns,” she says.
“You should then review this plan annually with your advisor to adapt this strategy as your circumstances change.”
A member of the Peregrine Group, Citadel Investment Services Proprietary Limited is licensed as a financial services provider in terms of the Financial Advisory and Intermediary Services Act, 2002.
Kindly note that this article does not constitute financial advice. All information and opinions provided are of a general nature and are not intended to address the circumstances of any individual.
Citadel is a specialist wealth manager with over 20 years’ experience in providing bespoke solutions for high net worth individuals. Through character-rich engagement and building strong relationships based on mutual respect and trust, Citadel enables its clients to explore the true potential of their hard-earned money. The best fiduciary, risk and asset management expertise is used to strategise, implement and manage a financial roadmap for its clients and their family. Visit www.citadel.co.za for more information. @Citadel SA