In 2023, as a career woman in South Africa, we hope you are making professional waves for all the right reasons. We’re delighted to see women leading in business and entrepreneurship – and tackling their personal financial planning for a wealthy future, too.
20 years ago, most of our women clients were financially dependent on male partners.
Not so these days!
And with more women responsible for their own financial planning, it is important to know what steps you should be taking as the family breadwinner or just as a savvy person with an eye to a secure financial future and fulfilling retirement one day.
Step 1: Understand the importance (and moving parts) of a sound financial plan
Effective financial planning involves budgeting, saving, investing and a certain amount of long-term insurance for starters. Understanding your own financial goals, your priorities and your personal risk appetite are essential before you can make informed financial planning decisions.
A workable financial plan also begins with the end in mind – how many more years do you plan to work, and what monthly income (in today’s rands) do you require in retirement? It then works backwards to engineer moving from your current financial position to that planned financial future.
Step 2: Realising that women have some unique challenges, financially
Here are the three that have been the most impactful, historically…
Women live longer which directly affects how much you need to save when planning for retirement.
Women earn less than their male counterparts, which means you have to allocate your investment budget wisely to build wealth on your own.
Women are still more likely to take a career break if they decide to start a family and that earnings hiatus will need to be taken into account in your long-term financial plan. Similarly (and harder to plan for), there are still more women than men who put the brakes on their careers/earnings to take care of ailing or elderly family members.
Step 3: Creating a customised long-term plan for financial independence
One of the essential aspects of personal financial planning for women is leveraging your returns via investments.
Building the confidence to move from being a saver to an investor starts with educating yourself (and getting good advice) so that you can use a strategic mix of equities, bonds, unit trusts and/or property to build your wealth and give you financial resilience.
Another critical aspect of a woman’s financial plan is adequate (but not excessive) long-term insurance. Having the right life and health cover in place can protect you and any dependents against the financial effects of events such as accidents, illness or early death.
Step 4: Regular review and adjustment of your investment plan
Planning for financial independence and ultimately, retirement is the longest-running project any of us will undertake. Starting as soon as possible is important and so is adopting a project management mindset. This means having a written plan, checking in regularly to make sure you are reaching your planned milestones (once a year is good enough unless you have a big life event to take into account) and adjusting course when life takes an unforeseen turn on you.
What now?
Long-term financial independence is now something within reach of South African career women, but it still takes a proactive mindset and the use of a personal financial plan (tailored and tweaked to your individual circumstances) to achieve it.
At Netto Invest, we provide objective input to give you the best possibility of achieving your chosen financial goals. Contact your CERTIFIED FINANCIAL PLANNER® professional and get started planning your investments today.
By Ian Beere, CFP® CA(SA)
