How women can become more financially resilient

ALTHOUGH the current depressed economic climate is affecting everybody, South African women are particularly vulnerable to financial hardship (the Stats SA General Household Survey of 2021 showed that 42.1% of households were headed by women) and are showing high levels of financial stress (in Money Stress Tracker survey by Debtbusters, the results leaned towards women feeling 30% more stressed about their financial situation than men).

Financial experts have weighed in on what women can do to “recession-proof” their finances, relieve their stress and make their future more financially secure.

Nowana Sobopha, a former investment analyst at Momentum Investments and assistant portfolio manager at the Eskom Pension and Provident Fund, has the following advice:

¡ Save for retirement. Saving for retirement as soon as they start working is critically important for women, Sobopha says. “If women save enough money for retirement, then they can afford healthcare and maintain a comfortable lifestyle – even if their partners have left. Women should consider increasing their pension or provident fund contributions by at least a percentage point when they receive a salary increase,” she says.

¡ Don’t live beyond your means. “I can’t say this strongly enough: everyone needs to avoid living off debt. A credit card should not be the answer when you want to buy something you cannot afford. Instead, save and buy the item when you have the money.”

¡ Don’t over-insure for funerals. “I don’t know about other cultures, but as a black woman, I know that funerals are very important in our families and communities. It’s important to ensure that our loved ones get a dignified send-off,“Sobopha says. “Given the importance that is placed on such an event, funerals are usually expensive affairs because they need to accommodate (and cater for) the community at large.”

With all of these costs, signing up for multiple funeral policies is often seen as a solution.

But Sobopha says: “I strongly believe there is a better way to meet this cultural need than just taking out multiple funeral policies. Instead of having multiple policies, put the money you would have paid towards funeral insurance premiums into an interest-bearing savings account. This will also give you access to money in the case of an emergency.”

¡ Don’t be too financially conservative. “It’s good to be cautious when investing your hard-earned money – but you also need to know that you need to take on a certain amount of risk if you want to grow your money,” Sobopha says. “When women are young they can consider more aggressive and riskier assets because they will have time to correct their investments if there are any changes in the market. For mature women, especially mothers and wives or those helping out family, the prospect of losing even a small amount of savings is incredibly stressful, making the risky asset classes terrifying. This is completely understandable considering the sacrifices made to save this money.

"But, if you want to realise real growth on your money, you will need to move away from thinking that all risk is bad. Sometimes it pays to take a page out of a man’s book – dive right in and just believe it will work out! This is especially important if you have several years to go before retirement. Take a chance, ladies, but most importantly, discuss your options with a financial adviser.”

Pension gap

Men retire on 35% of their final salary, on average, compared with women, who retire with between 9% and 26%, according to Alexforbes Member

Insights 2021.

Belinda Sullivan, head of corporate consulting strategy at Alexforbes, says the gender pension gap extends from the income gap and employment patterns. Furthermore, women typically live longer than men and spend more years in retirement.

Sullivan says that, to be prepared for retirement, women need to:

¡ Recognise the unique financial challenges they face as women and manage them with support and guidance;

¡ Start saving from as earlier as possible;

¡ Balance needs and debt;

¡ Know their options if they choose to stop working;

¡ Look at different investments for their specific needs; and

¡ Be active in making financial decisions.

“Education and advice help you to be financially savvy with higher levels of financial courage to improve your finances. Reach out, get advice from a financial adviser and empower your

future self,” Sullivan says.

Income protection

An analysis of Discovery Life’s 2021 claims data shows that while women hold 47% of all life policies, the value of their cover is much lower than that of men and very few female clients have sufficient income protection this is disability cover that pays out a monthly income, effectively replacing your salary, if you are permanently or even temporarily disabled through accident or disease.

As expected, Covid-19 was the leading cause of claims for women in 2021, followed closely by cancer, highlighting the importance of regular screening but also the need for comprehensive cover for cancer.

“Because so many South African households are single-handedly headed by women, it is clear that women need to protect themselves with the correct financial products,” says Kashmeera Kanji, Discovery Life’s head of market analytics and research and development. “Whether women have a role as a homemaker or an active earner in a household, they contribute directly to the financial wellbeing of their dependents and a life-changing event affecting them could cause significant strain on the household finances.”

Cancer presents a significant risk. Last year, Discovery Life paid 3 523 claims to its female clients for life-changing events, including R628 million in claims for cancer. Cancer accounted for 20% of all death claims, 27% of all disability claims and 50% of all severe illness claims for women.

Kanji encourages women to consider protecting their financial wellbeing through various financial products, particularly life insurance that includes income protection.