Lifting the lid on ‘money secrets’
Peter and Lerato are married with two children and own and run two businesses together. Peter manages the family finances and Lerato, while perfectly capable of being involved, chooses not to. Peter therefore developed a good relationship with their chosen financial planner while Lerato hardly knew him.
Fast-forward 10 years and Peter and Lerato have experienced some challenges in their marriage. Peter also had a child with another woman. He did, however, regularly update his will as circumstances changed.
Unfortunately, Peter then died in a car accident, which was a catalyst for a dispute between Lerato’s children and the other child he had. Lerato’s children felt that they were the only ones entitled to their father’s assets, but Peter had made it very clear in his will that all his children should benefit. Lerato, on the other hand, had left her financial future in her husband’s hands. Despite Lerato being a capable businesswoman, she made a strategic mistake by not being aware of or involved in the family’s financial planning.
The scenario above is more common than one may realise and is one of the reasons Nedbank has embarked on a new advertising campaign to lift the lid on these types of ‘money secrets’ that many of us have. The intention is to act as a catalyst to start a conversation about money in a constructive and honest way – the critical first step in achieving financial wellness.
Women’s month is about women taking control of their own destinies
Every year on 9 August we celebrate Women’s Day, acknowledging those who marched to the Union Buildings in Pretoria in 1956 to protest laws that oppressed women. Even though this protest was specifically against the restrictive pass laws, it opened many doors for the emancipation and recognition of women. This is what Women’s Month is all about.
This story of Peter and Lerato can happen to anyone – here are some practical tips that can help ensure you don’t end up in the same situation.
- Get professional advice so you can set up a financial plan
To make sure your goals become reality you need to put a financial plan in place. To do this you need a professional financial planner who has the relevant knowledge and experience to help you achieve your financial goals. Seventy percent of people who have a financial planner claim to be financially better off, according to Amoné Redelinghuys, the digital research specialist at Columinate who conducted this research on behalf of Liberty.
- Do not rely on your partner for financial security or to manage your finances
According to UBS Global Wealth Management (2019), 58% of women rely on their partners to manage long-term financial decisions. This generally puts women at risk financially during critical life events such as the death of a spouse and divorce. You need to take responsibility for your own financial affairs to ensure your financial freedom. Make sure you have accounts in your name and keep track of the transactions on these accounts.
- Manage your debt and expenses
To cut down on unnecessary expenses consider the following:
Write a shopping list
When you go grocery shopping, make sure that you write a shopping list beforehand and stick to it. Avoid impulsive purchases. Bulk buying can also save you a couple of rands.
Make your own lunch for work
Avoid buying food at work that you could have made at home for cheaper. If you spend R50 a day on lunch at work, that amounts to over R1 000 a month!
Manage what you spend on your kids
If you have kids, especially teenagers, keep track of what you are spending on them, as this can be one of the most underestimated expenses. For example, your teenager going to the movies and having some snacks (R120) over a weekend and then eating out (R100) will set you back by R220. This adds up to R880 a month, excluding any other expenses.
- Focus on the long term
While some goals may seem very far off, such as making provision for your retirement or your child’s education, the earlier you start, the more likely it is that you will reach your goals.
The cost of education in South Africa is increasing every year. If your
child starts grade R in 2019, you can expect to pay about R1,4 million or R3,4 million
over their school career for public or private education respectively. While this might
seem far off, it is important to start making provisions as early as possible.
The earlier you start, the more likely you will be able to reach your goals.
This is because you are giving your money more time to grow. You can use
investment vehicles such as unit trusts and endowment policies for these
purposes – your financial planner will be able to help you choose the right
investments.
- Protect yourself and your family from the impact of unexpected events
You are your greatest asset. Are you aware that the incidence of breast cancer has increased by 22% since 2008, and that it is the most common form of cancer in women? ? It is therefore critical to make provision for a potential loss of income if you are unable to work. It is equally important to put plans in place to protect your family in case something happens to you, for example, you are in an accident and become disabled and are unable to work. Your financial planner can help you choose from the available insurance options, including life insurance, disability and dread disease cover, as well as supplementary retrenchment benefits. To have an additional buffer for loss of income, it is recommended that you build up an emergency fund of at least six months’ salary in an account that you can access easily.
- Make sure you have a
valid and updated will
If you pass away without a valid will, you will die intestate, which
means your assets will be distributed in accordance with the Intestate
Succession Act, 81 of 1987. As a result, your loved ones may not receive
the assets you wished them to have. To ensure you leave a legacy for your
family and your assets are distributed according to your wishes it is critical
to have a will that meets the necessary legal requirements and that reflects
your latest circumstances.
Every woman should be able to enjoy financial independence, regardless
of their earnings. This starts with having a financial plan informed by expert advice and making smart decisions about your money.