Protecting your finances at every milestone

Article written by Vera Nagtegaal , Executive Head at hippo.co.za. Article from MoneyWeb.

South African women are living at least six years longer than their male counterparts, a mid-year population estimate compiled by Statistics SA shows. While various reports also reflect an increase in women participating in the economy, it is imperative that women continue to take charge of their financial futures.

Women must assess their finances and seriously start investing and saving, as being left widowed or divorced can be catastrophic without having a safety net.

Unlike previous generations, many families are finding it tough to survive on one income because of increases in municipal bills, transport, electricity, food, and data costs.

Being completely financially-dependent on your spouse or partner may no longer be a good idea considering that Statistics SA data on Marriage and Divorces shows that a significant proportion of couples will breakup within a decade of tying the knot.

According to the survey, released in 2016, four in 10 divorces (44.4%) of the 25 326 recorded that year, lasted for less than 10 years.

Whether you have a long-term partner or not, it’s important for women to take financial decisions into their own hands.

With the doubling of the divorce rate globally since 1990 for women over 50, referred to as ‘grey divorce’, married women of all ages should be encouraged to participate equally and actively with their (marital) partners in financial decisions and investment choices.

According to a recent report by UBS Global Wealth Management, 59% of widows and divorcees regret not taking part in long-term financial planning when they were part of a couple.

Some tips on making sound decisions at different age milestones:

The twenties
Find a reputable financial adviser and take out important policies – such as income protection (in case you are ill and can’t work), medical aid (to cover unforeseen health issues as well as day-to-day medical expenses) and a retirement annuity.

You want to get your retirement savings started early on, so you don’t end up scrambling to save at the end of your career.

It’s also a good idea to begin saving for short or medium-term goals such as travel and buying property, using savings vehicles like unit trusts.  Unit trusts are well-established financial instruments that allow people to participate in the markets.

The thirties
If you start thinking about having a family during your thirties, you should certainly start doing your research about life insurance, affordable family medical cover and homeowners’ insurance. Putting money into an education plan can also put your mind at ease about paying for your child’s future studies.

The forties
Depending on your individual trajectory, some women might have teenage children at this stage. Others might be thinking of growing their portfolio of properties or purchasing a new car. If you find yourself drawing from long-term savings to cover the cost of your children going to university, or to pay for a large purchase, be sure to increase the amount you’re putting away for your own retirement.

The fifties
Don’t be in a hurry to retire if you are enjoying your career and need more time to save for future security. Another reason to keep on working is to be able to afford some of the luxuries that were possibly sacrificed when your children were young, ranging from holidays to home renovations.

The sixties
Women at this age might experience an increase in health bills than in previous years, or they might find themselves in the unfortunate situation of being widowed. It’s therefore important to meet with a financial adviser to assess your existing investments to be sure that you are getting the most out of your money.

According to the latest World Bank Group Africa poverty report, there are as many widows as married women by the age of 65.

Whether you have a long-term partner or not, it’s important for women to empower themselves by taking financial decisions into their own hands. Like most things, it begins with educating yourself – which in this case involves financial literacy in various areas such as saving, education, medical costs and other long-term expenses.