Women & savings – part two
29 August 2016
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On mobile, on digital, on demand, this is Old Mutual Live, Money Coach. Hello and welcome, my name is Chris Gibbons. We’re coming to the end of National Women’s Month. So before we take the spotlight away I thought it would be useful to focus once again on women and savings. How women save, some of the pressures they face as they try to save and some do’s and don’ts. Once again we’re joined by Old Mutual’s Head of Financial Education John Manyike, John, welcome to you.
John Manyike: Good morning Chris, it’s nice to be chatting again today.
CG: In our last conversation on women and savings we highlighted a number of key issues. Could I just ask you to recap on those?
JM: Firstly, we found that some studies around the world confirm that generally women earn less than their male counterparts, on average. Again, women live longer than their male counterparts. Which means they’d need to save more in order to be able to live beyond their retirement stage. We made a suggestion that women need to start saving early. Given the fact that they live longer than their male counterparts and with less income. That was a key highlight.
You need to set financial goals
CG: What are a couple of things that women need to do to boost their savings?
JM: I think firstly, it’s very important for women to set financial goals. The financial goals are critical, they act as a guide. they help us to actually measure progress. I think it’s very important that women do that. I think the good thing though is, some studies also around the world seem to confirm that women are less likely to be distracted from their long term goals, which is very critical. If a woman has priorities in life, they can contain the temptation of having to spend the money on things that they actually want. As opposed to things that they need. So I think that’s a great thing to have. Women need to set financial goals.
CG: Is it as simple as that?
JM: Of course it requires a lot of discipline. So if a person doesn’t have discipline, it can become a challenge. The good think though is that when you set goals, it helps you with procrastination. Because you have to start at a given time and you need to track your progress over time. Those are the benefits of doing that. If women can start setting goals and make sure that their savings are automated. Then they have a better chance of staying focused on their financial goals.
How to avoid falling into debt traps
CG: Come up from the other side, how do women avoid falling into debt traps?
JM: This is also linked to what we’ve just talked about now about setting goals because if you’ve got goals in life and that you’re emotionally attached to, you understand where you’re going. As a result, you’re in a better position to overcome temptation to spend money on things that you don’t actually need.
Whilst debt is not a bad thing, debt needs to be used responsibly. It’s very critical that women use debt responsibly. This is not only applying to women. But we’re talking in the context of the fact that women tend to earn less than male counterparts and the fact that they live longer.
Which means their financial dynamics of saving are slightly different. Because women have more issues and more complex challenges that they face compared to their male counterparts. That’s why they need to be extremely prudent in their financial decision making and how they use debt.
CG: Of course that brings us right back to something you and I have talked about many times; the question of setting a budget, of understanding your finances, where the money comes from, where it goes to.
JM: Absolutely. A simple tool, like a budget helps a person track whether they are living within their means or whether they’re living beyond their means. A very important thing to have for financial prosperity.
CG: Then John, what happens when a woman, or indeed anyone else, just can’t afford to save? They’re not coming out at the end of the month, there’s nothing in the kitty. Here you and I are saying, pay off your debts and plan your finances and save-save-save – there’s nothing to save with.
JM: Yes, this is a question in many people’s mind, especially in South Africa. I often hear people saying: How do I even begin to save when I’ve got so much debt. I don’t earn a lot and so on. The reality is, whatever the challenge may be, somebody is going to have to make a tough decision around how do they change that situation.
Again, it goes back to applying the big five principles of money management that we always talk about around our Old Mutual On the Money Financial Education Programme. It’s really critical that we apply those principles. For more information, we can direct them at the end of the show as to where they can find those details.
But they need to apply the big five principles of money management to the extent that they can stabilise a situation. Simple things like budgeting, having a goal in life and charging down their debts, having a strategy to create wealth and so on. Those are some of the things that they can start applying.
Everyone can do with financial advice
CG: You’re listening to Old Mutual Live, the Money Coach edition, on demand, visit dogreatthings.co.za. We know from previous research John that over 50% of South African women tend to look towards a house as an investment choice, but only 20% look to professionals for money advice? Is that wise? Do women, like the rest of us, need professional advice?
JM: Absolutely, without a shadow of a doubt. Women also need to partner with a financial advisor, actually consult a financial advisor twice in a year to look at your portfolio. But make sure that your advisor has put together a portfolio that is more aligned to the life stage and so on. You cannot live without a financial plan if you want to secure a better future and that’s critical that that happens.
CG: Good advice there, we’ll leave it for today. This has been another edition of Old Mutual Live Money Coach, my name is Chris Gibbons. With me on the line has been Old Mutual’s Head of Financial Education, John Manyike. John, if anyone wants more information, where would they go?
JM: They can visit our website and look for the On the Money page. Also they can follow us on Facebook which is On the Money Financial Education programme. They’ll find lots of videos, lots of content, lots of articles on different money management subjects. They can also follow us on Twitter which is OM_OnTheMoney.
CG: There we go John, good to chat to you. Remember, please feel free to get in touch any time if you have any questions for John or for me, topics you’d like us to cover on Old Mutual Live Money Coach. Just send them to me direct at email@example.com, I’d be delighted to hear from you. Until the next time, thank you for listening. Old Mutual Live, on mobile, on digital, on demand.