When considering their financial independence, there are certain factors that women need to consider, such as living longer than men and taking care of extended family, says Ester Ochse, product head at FNB Integrated Advice.
She shares the following ways that women can win with their money management:
1. Budget
Drawing up a budget will help to monitor spending as well as the allocation of money to the needs of a household. Ochse says women engage less with FNB’s budget tool than men, which may have an impact on their longer-term financial wellness.
If women are unsure about starting their own budget, here are three methods they can use:
- The 50/30/20 budgeting rule
With this method, women need to allocate 50% of their net income to needs like rent, groceries, and utilities; 30% to wants such as hobbies, vacations and dining out; and 20% to financial goals like savings and debt payments.
- The 80/20 rule
This budgeting method allows women to allocate 80% of their income to needs, wants and debts, and 20% of their income to savings.
- The 70/20/10 rule
This method separates income into three groups: 70% for living expenses, 20% for debt payments, and 10% for savings.
2. Credit
"While there is not a major difference between men and women, over the past year we have seen more men taking up more unsecured credit than women.”
“The idea is to reduce unsecured credit to a manageable level with the freed up cash flow from the budgeting exercise and then applying the principle to reducing secured debt.”
3. Saving money
When it comes to savings, she says women are slightly better at saving than men, with this group consistently having more savings on hand than their male counterparts .
Approximately 2% more women have one months’ worth of saving compared to men.
“The ideal aim is to have three months’ worth of income available in a fund that can be easily accessed, specifically for unforeseen expenses. It may seem like a lot but start small and set small goals to build up an emergency saving,” Ochse says.
4. Protecting family
To take care of your loved ones, having life or funeral cover - and having a will in place, is important. She says more women tend to take up life and funeral cover compared to men.
- What is the difference between life and funeral cover?
Life cover is aimed at ensuring that a person’s financial dependents can maintain their lifestyle if something should happen to the breadwinner, while funeral cover is aimed at taking care of expenses after the death of a loved one. The latter will, however, not be sufficient to help a family maintain their expenses.
It is important to get advice to guide you in getting the right amount of cover required for your specific circumstances.
Having a will in place will allow women to protect their family, and ensure that both their financial interests are looked after, and that the people they want to inherit their estate will inherit it.
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