1. WOMEN ARE GOOD AT MONEY
Women make over 70% of household buying decisions and have a significant impact on the finances of the household.
However, women are less likely to take the lead when it comes to investing.
This is despite research that shows that, as a general rule, women make better investors. Fidelity, the large US asset manager, ran a survey of its more than 5 million customers and found that, over a 10-year period, women outperformed male counterparts by 40 basis points.
This is usually because, when it comes to investing, women are more goal focused and are less likely to trade aggressively, take high risks or try to time the markets.
This was confirmed in research by Momentum Investments which studied the behaviour of male and female investors in their Momentum Flexible Investment option from 2020 to 2023.
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They found women would switch between unit trusts 5% less than their male counterparts. When performing a switch from one unit trust to another, investors in general are destroying value – this is called a behaviour tax.
Since Covid-19, men have experienced an average behaviour tax of 4% per year.
Women, however, experienced a behaviour tax that was 20% lower than that of men. When looking at overall returns, women tend to outperform their male counterparts by nearly 30 basis points or 0.3%.
Despite being better investors, women tend to have low confidence about their financial abilities and are less likely to invest for themselves.
Fortunately, this is starting to change and there has been a significant increase in the number of female investors.
Don’t let self-doubt get in the way; start learning and open your own investments. There are so many no- or low-cost options to learning about investing, including videos, podcasts and articles.
Commit to consuming one piece of financial education a week.
2. THERE IS SUCH A THING AS SEXUALLY TRANSMITTED DEBT
If you get married without a marriage contract, your marriage regime defaults to in community of property. This means you share each other’s assets, but you also take on your partner’s debts – that includes those debts your partner incurred before you were married.
Carefully consider your marriage regime and understand the financial implications and spend money on a legal agreement.
It will be more valuable than the money you spent on the wedding. If you enter a relationship, even if you are just living together, ask to see your partner’s credit score and have an open and honest discussion around finances.
If you cannot share financial information, your relationship is already on rocky ground.
3. YOU ARE GOING TO LIVE WELL PAST RETIREMENT AGE
Women live about six years longer than men. This means you need your own retirement plan. If you are relying on your partner’s retirement plan, it is not likely to meet your needs. Have your own financial adviser and make sure you understand your retirement outcomes.
Don’t cash in your pension when you have a child – you do not want to rely on that child to support you in later years.
You will also most likely need to work past the corporate retirement age of 60, so you need to think about having a second career or a side hustle.
Fortunately, most women find that, as they get older and the children leave home, they have more time and energy to take on new projects and even careers.
4. INSURANCE IS CHEAPER FOR WOMEN
The upside of living longer is that women pay less for life insurance.
A woman will pay a third less than a man for the same amount of life cover.
Insurances like life cover are extremely important if you have children – this is a way to protect their future and even leave a legacy.
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We see similar savings when it comes to car insurance because insurance claim statistics show that women have fewer accidents.
A woman over the age of 35 pays on average of 7.5% less for car insurance than a man with the same car.
This difference is even greater between younger men and women.
A 25-year-old man would pay around 15% more for car insurance than a 25-year-old woman.
5. YOU WILL FINANCIALLY SUPPORT YOURSELF AND, POSSIBLY, YOUR CHILDREN
Not only is a woman likely to find herself widowed, but, in South Africa, we have a high divorce rate of about 50%. South Africa also has a very high rate of single mothers and fewer than a third receive regular assistance from the father.
This means, statistically, there is a good chance you have to support yourself and raise children alone. Make sure you are financially independent – have your own money plan, bank account and credit record.
Be very careful of taking on debt – that will rob you of future choices and your ability to educate your children. Take an active interest in your household finances and make sure you have your own investments.
Remember, as a woman, you are good with money.
6. YOU PROBABLY EARN LESS THAN YOU SHOULD
The sad reality is that women still earn less than men.
This is due to several factors: women may take time out of the workforce to raise children or choose a career for flexibility, not income.
Women are more likely to work in caregiving roles, such as a teacher or nurse, which are underpaid.
And then there is real pay discrimination.
A PWC report found that women in executive positions are paid on average 28% less than their male counterparts.
Pay discrimination can be dealt with through being assertive around pay negotiations, but one of the best ways to boost your income is to have a side hustle. Fortunately, women have a natural ability to multi-task.
Ultimately financial independence is about starting that relationship with your money.
Know where it goes each month and have a plan for where it will go in the future.
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