Inclusion of women in financial planning
During Women’s Month, we as women often take time to reflect on how we can empower ourselves, break down barriers, and remove the stigma surrounding our inclusion in financial planning.
In many cultures, when women marry, they are usually encouraged to cede all primary responsibilities to their spouse, thereby identifying them as the head of the household. These days, more and more women are accessing bigger and better opportunities in the workplace and many are running their own businesses. As a result, they become financially independent; some so much so that they earn at home a salary equal to or higher than that of their spouse. Other women have no spouse and take full responsibility for financial planning themselves.
Although this is the case, some married women are still expected to take a back seat when it comes to matters related to financial planning in their household. Responsibility is left to the spouse on the assumption that his leadership and sole discretion in the matter will serve the best financial interests of the family. However, because of this, it often happens that women find themselves in a difficult financial situation when they divorce or when their spouse dies. Even during the lives of married couples, the assumption that he will do a better job of managing household finances is simply not always true. And due to a lack of initial involvement in household finances, they are often forced to start from scratch, with very little or no knowledge at hand.
As a woman, the responsibility for the distribution of money within the household is as much your responsibility as that of your spouse. As such, it’s important to understand your family’s financial needs, and how best to meet them, even in the unfortunate event of your or your spouse’s death.
Financial planning would include financial management (budgeting), investment planning (savings for emergencies, discretionary investments both locally and overseas as well as retirement planning) and/or risk planning (car insurance , medical aid, life cover, disability cover and cover for fear of illnesses). Financial planning should be implemented under the guidance of a financial advisor in order to build and protect wealth and mitigate risk. Given this, the active participation of both spouses is essential in planning and building financial planning strategies for the household. Indeed, there are important decisions that need to be made in the process, which require the input and understanding of both parties.
With the rising cost of living and rising interest rates increasing future repayments on household debts, continuous adjustments in financial management, budgeting and expenditure management, consumption and prioritization should be considered. This could mean increasing the amount of money set aside for groceries, utilities, and entertainment. That said, it is not always possible to freely adjust financial contributions, especially if you are an employee. Both spouses should be involved in finances and both should agree on which spending needs should be prioritized.
Even for women who have chosen to stay home and care for their homes, financial literacy and awareness are essential. It is important to understand how you and the rest of your family will be cared for if the breadwinner dies. All of this is important to know so that if your spouse excludes you from conversations about their retirement savings, voluntary savings or risk coverage, you can find out what steps they have taken to ensure your financial security even beyond retirement or death.
Since women who go on maternity leave often experience pay cuts, it is also important that they have a conversation with their spouse about how their medical and financial needs will be covered under the conditions of compromised income. .
Understanding and being part of the financial planning process has many benefits. For example, when both spouses know their individual and joint financial situation, they are in a better position to support each other financially in times of need. It also allows for more accurate risk/loss identification in the event of death or retirement, enabling adjustments to be made proactively. It could also help manage expectations that could lead to disappointments if not met.
Death, although a sensitive subject, is extremely important to consider. The importance of having a valid last will and will cannot be stressed enough. Both parties must be at the same level of understanding on how the transfer of assets will take place in the event of death.
Women should take responsibility for being involved in household finances and should encourage open conversations about finances with their spouses. Where possible, they should also teach their children about finances and encourage them to learn from an early age. Such discussions with your daughters will make them confident women about their finances.
I would like women to gain the courage and confidence to ask the right questions as well as to know when to seek professional help when it comes to household financial planning.