During August, I had the chance to go to companies around South Africa to address women on how to manage their money. I thought I should share with you some of the key insights coming out of my interactions with women.
To give context to the challenges that women face, one needs to look at some of the key statistics. It is a sad fact that men continue to earn considerably more than women; in South Africa, men earn between 15% and 18% more than women. To put this into context, black women generally earn less than white women.
Stats SA released the Living Conditions Survey in January this year. According to the survey, white-headed households on average earned the highest income at R444 446 per year and at the bottom, African – headed households earned the least at R92 983. This means that an African-headed household still earns less than a quarter of what white-headed households earn. Further to this, over 39% of families are headed by single women.
It is therefore extremely important for women to be educated about personal finance and to manage their money wisely.
- Buying cars on balloon – I came across women who have bought cars on balloon with the balloon payment of R150 000 and above. When I asked why they bought cars on balloon, many did not understand what the implications were. As a follow up question, I would also ask how they were going to pay the balloon when it was due and many had no idea. I therefore continue to urge women to save and pay a deposit for their cars and NOT to buy cars with a balloon payment. Buying cars with a residual also opens them to the risk of rolling forward the balloon payment and the balance owing to a new car which puts them into deeper levels of debt.
- Taking personal loans in their names on behalf of their lovers. This is a big NO, NO. I honestly do NOT believe that a man who truly loves a woman would ask her for money. Sandra* borrowed R200 000 personal loan on behalf of her boyfriend who has since left her. She is now heavily indebted and is struggling to pay the loan. Just don’t go there as a woman. Let your lover go to the bank to borrow money. This is becoming so common I have to wonder if there are men out there who date women just to exploit them financially and then leave to go and do the same to the next woman. The only way to protect yourself is to have a principle that says “I Will NOT borrow money to a man.”
- Using a personal loan to pay for wedding expenses – this is another area that is becoming a common problem. I advise young men and women to take tax-free investments as soon as they start working so that one day when they get married, they would not have to take personal loans and use credit cards to pay for wedding expenses.
- Funeral cover – women continue to take stand-alone funeral cover for their extended family members which is generally more expensive than funeral cover that is provided as part of one’s own life cover.
- No Wills – I came across many young mothers with young children yet they have NO Wills – this is a big risk to their children in case of an untimely death.
- The more we earn, is the more debt we accumulate. I want us as women to be extra careful of this fact. We should ensure that we increase our savings and investments as our incomes grow.
- Women continue to take credit life policies that take away a lot of their money. For more on credit life, read pages 115 to 123 of the book From Debt to Riches – Steps to Financial Success. I am glad that more and more women who have had the chance to attend my talks are taking life cover and cancelling credit life policies thereby saving themselves a lot of money.