During August, we celebrated the inroads made towards political freedom in South Africa, thanks to the contribution of women. Despite these significant achievements, many working metropolitan women still feel less confident that they will make good saving and investment decisions when compared to men, despite the fact that they are highly educated.
This is according to Elize Botha, Managing Director of Old Mutual Unit Trusts, who says the results of the 2017 Old Mutual Savings and Investment Monitor reveal that with the exception of technical qualifications and post bachelor degrees, 8% more metropolitan working women are likely to hold matric certificates, college and university bachelor degrees, when compared to men. “Yet, when rating their ability to make good savings and investment decisions, 33% of women in the Monitor rated their financial confidence lower than five out of 10 (this number was only 26% for men).
“Furthermore, only 68% of women rated their confidence level higher than six out of 10, compared to 75% of men when asked the same question,” adds Botha.
Botha believes the goal of achieving financial security and independence shouldn’t be reserved for Women’s Month only, but should remain a priority for every South African woman, all year round. “Life is unpredictable, and with our country’s increasing prevalence of divorce, coupled with the current tough economic environment, it’s critical that women feel empowered to make sound financial decisions,” says Botha.
The Monitor also revealed that women still feel less financially secure than men. “Our data shows that 32% of women, as opposed to 26% of men, feel they don’t have sufficient financial security to survive an unplanned emergency.
“Despite how women (or men) view their current financial situation, financial freedom and the security it brings is attainable by South Africans. It’s not possible for everyone to become wealthy, but it is possible for all of us to be financially free.”
She explains that financial freedom, and the security it brings, can be reached when your income from your assets exceeds your costs. “The first, and perhaps most important step in achieving this goal is to eliminate all your debt and lower your living expenses.”
The Monitor also shows that, on average, 16% of household income is spent repaying debt. “This percentage is not sustainable and means that many households will never reach financial security. Despite having a high income, a big house, or a fancy car, the principles of personal finance are universal – your income should always exceed your expenses. As long as you’re beholden to your credit card or car repayment, you are not financially free.”
The second step in achieving financial freedom is to create an alternative income stream using an income-generating investment. “Using an equity-based investment vehicle, such as a unit trust, will grow your wealth and, later, generate a sufficient second income that can be at least as great as your expenses. From a monthly premium of as little as R500, a balanced portfolio unit trust is designed to help you reach financial freedom and should be better at providing inflation-beating returns over the long-term,” says Botha.
“Saving enough money to be financially free may feel like a ‘long shot’, but the first step is always the hardest. Don’t be intimidated by your goal, or put off by political commentary, or market noise – just start today,” concludes Botha.