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We all want financial freedom but how do you achieve it - here are 3 practical building blocks

File Image: IOL

File Image: IOL

Published Aug 27, 2021


A report by the World Economic Forum stated that the Covid-19 pandemic and ensuing lockdowns have impacted women more severely than men, further widening pre-existing gender pay gaps.

“Statistics show that women are still paid less than their male counterparts,” says Pat Magadla, Senior Business Development Manager at Old Mutual Investment Group.

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“A recent survey also revealed that from a middle management perspective, in South Africa, women generally earn 72c to the rand. We also can’t ignore the fact that many households in South Africa are single mom households. These factors make it that much harder for women to save or put money away for long-term investments.”

Magadla has been working with an independent financial adviser and financial coach Naseera Turkey, CEO of Azzuri Capital, to empower women to be fearless and financially free.

While fully cognisant of the social realities that make it harder for women to save and invest, both Turkey and Magadla stress that having a solid financial plan – and committing to it – goes a long way to counter these factors and gain greater financial freedom.

“Women need to have a well-thought-out financial plan and commit to it! Not for anyone else, but for themselves. Start by looking at your daily, weekly, and monthly spending habits. If you look at how you manage your money in terms of your household expenses, you’ll gain insight into, and most likely confidence in, your ability to handle your finances,” says Turkey.

The experts suggest three key building blocks for women to take control of their finances.

1. Have a budget

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Women need to understand exactly where every rand is going, and to be mindful of the small expenses that can snowball into bigger ones.

“I always like to refer to the Benjamin Franklin quote, “’beware of the small leaks for they too can sink a great ship,”’ says Turkey.

In putting together a budget, a financial advisor will be able to help you to create a realistic plan based on your circumstances and goals. This advisor needs to be someone that you feel comfortable being completely honest with, as they will need to know everything to create an appropriately tailor-made plan for you.

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There are also several online and digital tools that women can make use of to assist them with, not only their budgeting requirements, but also tracking how they are performing relative to their budgets.

2. Build an emergency fund

The past 18 months have highlighted the importance of having a buffer to protect people from unforeseen financial challenges.

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Magadla advises that women should ideally work towards having a stashed fund that can have enough to sustain them for three to six months, should the unfortunate happen (such as a retrenchment, reduced earnings, etc.) to prevent their financial plans from being thrown off course.

Starting an emergency fund is relatively simple, but you need to ensure that it is kept in a separate account from your day-to-day spending, so that you are not tempted to dip into it. Critically though, advises Magadla, women must look for a savings or investment vehicle that will give them a return that can outpace the steady increase in the cost of living and doesn’t lose value.

3. Focus on the future

Studies have shown that women are now living longer than men, so planning for a long retirement is imperative for women.

According to Magadla, investing in a unit trust is a cost-effective way to start creating a nest egg.

“For as little as R500 a month you can start to get exposure to both local and international shares listed on stock exchanges. It is also a completely transparent investment, where you will see exactly where your fees are going and how your investment is performing,” she advises.

We must spend less than what we’re earning so that we can free up the money needed to save and invest, but this requires consistency and dedication.

In the words of Warren Buffet, “don’t save what’s left after spending, but spend what’s left after saving,” Turkey concludes.