Self-sacrifice is at the heart of motherhood, which explains why very few mothers consider their own financial well-being ahead of meeting the needs of their loved ones. But if you really want to help your dependants, you need to help yourself.
This Mother’s Day, moms should take the necessary steps to achieve financial security, Professor Roseanne Murphy da Silva, the president of the Actuarial Society of South Africa, says.
“As a mother, it gives me enormous peace of mind to know that being in control of my finances means that I’m in a position to help those I care about should the need arise. I have also made sure that I will not place a financial burden on my loved ones as a result of disability, illness or old age.”
Murphy da Silva says that women often allow the main breadwinner to take care of the family finances, but this does not mean that you, as a mother, should hand over control of your personal finances.
“Only by empowering yourself to take your own financial decisions and protecting yourself against unexpected life events can you truly secure your financial independence and protect your loved ones,” she says.
She offers the following guidelines to mothers wanting to take control of their financial future:
Have your own bank account
Many women manage day-to-day finances on behalf of their family using bank accounts in their partner’s name or joint accounts. However, Murphy da Silva says every woman should have a bank account in her name.
Many women fund household expenses from their salaries, believing they can rely on their partner’s investments and savings for their future. Murphy da Silva says arrangements like this usually end badly for women in the event of divorce or death of the partner.
“Having your own bank account means you and your partner can share expenses more equally. You will then be able to allocate a greater portion of your funds towards your own savings,” she says.
“Should your partner pass away, his bank account will be frozen. Having your own account means you can continue to access the necessary funds without having to wait for his estate to be settled,” she explains.
Plan for your retirement
As equal partners, you and your partner should both have your own investment portfolios and retirement savings tailored to your individual needs, Murphy da Silva says. This should be part of a joint plan, which both of you discuss and agree upon.
“Not having savings in your own name is a gamble, as it represents a loss of control over your future,” she warns.
Women face unique challenges in providing for themselves financially into retirement. For example, women are statistically likely to live longer than men and may therefore need to rely on their retirement savings for many years more.
Furthermore, women earn 15 percent less than their male counterparts in South Africa, according to the 2015 Women’s Report by the South African Board for People Practices. Many women also face breaks in income owing to maternity leave and family responsibilities.
“This means that, as a woman, you will have to save a greater percentage of your income than your partner in order to achieve financial security for your whole life. You need to develop an individual retirement saving strategy that will take this into account.”
A rule of thumb says that the average person should be investing 15 percent of their pre-tax income for retirement. Murphy da Silva says for women it should be closer to 20 percent. You could also consider continuing to work part-time after your retirement, she suggests.
Protect yourself and your family
The foundation of any long-term financial plan is having adequate life insurance, disability cover and medical aid in place to help you cope with any unexpected expenses and to continue to provide for your family, Murphy da Silva says.
“If anything were to happen to you, you would want the certainty that your loved ones were provided for. Should anything happen to your partner, you will also need to know the details of any policies in order to take the appropriate steps,” she observes.
She emphasises that stay-at-home mothers should also consider their own life and disability cover because of the valuable role that they play in households.
“Just because you are not earning an income explicitly, it does not mean that there is no insurable value attached to what you do. Think of all the services that your family would need to purchase if you weren’t around to do them,” she says.
A trusted financial adviser will be able to guide you in developing a long-term financial plan to cope with unexpected events and provide for you into retirement.
“As a mother, it’s important to know that you can provide for yourself and for your loved ones, no matter what the future holds. Ultimately, by taking an active interest in your finances and participating in decision-making, you will not only protecting yourself, but ensuring a brighter future for you and your family.”