Every woman has to ensure that she secures her future by taking control of her finances.
Relying on someone else can leave you vulnerable if they are no longer able or willing to help. At worst it could mean someone making decisions – unintentionally or otherwise – that are not in your interests and that will affect your financial future and that of your family.
Shafeeqah Isaacs, head of financial education at personal loans provider, DirectAxis, says that while taking charge of your money and making your own financial decisions sounds liberating, taking that all-important first step can be difficult.
“If you’ve relied on someone else, deciding to go it alone can be daunting, especially if they’re reluctant to give up control. In circumstances such as a divorce or bereavement where you’re suddenly on your own and dealing with lots of issues, it may be tempting to find an alternative to taking on the responsibility yourself.”
Whether it’s your decision or forced on you by circumstances, there are some financial basics that every woman should know, says Shafeeqah.
“The first of these is to dismiss the stereotypical view of men as breadwinners and women as spenders; there’s plenty of evidence, borne out by research, to show women are more cautious with money than men. A natural tendency to be careful with money is potentially an advantage, as long as excessive caution doesn’t become a reason for not taking action.”
A financial rule-of-thumb is that the sooner you do something about your financial affairs the better. Here’s what you need to know to get started.
Do a reality check
You’ll first require a clear picture of your income and expenses. To help you do this there are plenty of online budgeting tools such as www.directaxis.co.za/make-a-plan/set-financial-goals-and-manage-your-finances-like-a-pro
Alternatively, get an exercise book and open it across two pages, or draw a line down the middle of a piece of paper. On the left write down all your income. Include everything such as your wages or salary, tips, commission, bonuses, maintenance or money from side-hustles.
The important thing is to be honest. You want a realistic financial picture and you’re not doing yourself any favours if you inflate your income to make it seem you’re better off than you really are.
On the right list all your expenses. It’s easier if you begin with recurring expenses such as bond payments, rates, rent, school fees – those costs that remain about the same each month.
Below these, list your variable expenses. These include transport or petrol, food and ‘phone bills. It’s helpful to print out a few months’ worth of bank statements to work out how much these cost on average each month. Again, remember that underestimating your expenses isn’t doing you any favours. You want the figures to be as accurate as possible.
The difference between the totals on the left and right pages will give you an idea of how much money you have to work with each month or if you’re living beyond your means.
If your expenses match or exceed your income, you need to fix the problem. There are only two ways to do this: either you need to earn more, which is easier said than done, or you need to cut back on your spending.
The best place to start is with unnecessary expenditure. Can you cut back on entertainment or reduce your grocery bills by sticking to necessities and not buying treats? Try making your own meals and not ordering takeaways, or start a lift club to get to work and save on petrol.
“Most of us don’t often take a careful, honest look at where we’re spending our hard-earned money, but it’s worth doing. You may be surprised at how much you’re spending on things that aren’t essential and what you could save if you cut back a bit,” says Shafeeqah.
But she warns not to be tempted to stop or withhold repayments on your bond, loans or other credit agreements. Doing this will negatively affect your credit score. Ultimately this will make it more difficult, if not impossible to apply for credit, get a loan, a bond or car finance. It could also mean that you pay more interest.
“Confronting reality can be intimidating if you’re concerned about your financial situation, but hope alone isn’t a strategy. It’s better to have a realistic view of where you are and to take control. If necessary, you can speak to creditors about payment plans or get professional help. Sticking your head in the sand and ignoring payment notices or skipping instalments will make the situation worse.”
Stay in charge
Being in control requires more than a once-off exercise. You have to remain actively committed to managing your financial affairs.
Once you’ve won a few small victories such as setting a budget, cutting unnecessary expenses and perhaps settling and closing high-interest retail accounts, you can start making bigger, longer-term plans.
Some financial experts recommend the 50/30/20 rule as a guide on how to prioritise spending. It suggests using 50% of your income on essentials such as food, rent or paying your bond, spending 30% on discretionary expenses such as clothing or entertainment and then saving or investing the remaining 20% for rainy days as well as retirement.
“While this isn’t possible for everyone, particularly given the uncertain times we currently find ourselves in, consider it a guide – something to strive for,” suggests Shafeeqah.
A few other things to think about
Educate yourself. There’s plenty of easy-to-understand, free information and tools online. Once you’ve found a few sites that work for you and cover relevant topics, you’ll be able to compare the information and advice to make informed decisions.
Don’t let investing scare you. You don’t need to make big investments to make your money grow. Investing smaller amounts consistently over time can often deliver better results than an aggressive approach.
Don’t spend to make yourself feel good. You’ll ultimately get more satisfaction from being financially secure.
If you make a mistake learn from it. Don’t allow it to prevent you pursuing your financial goals.
And, if you need more inspiration to take the first step, consider this from Beyoncé: “I truly believe women should be financially independent from their men. And let’s face it, money gives men the power to run the show.”