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Leslie Greyling *
In a recent seminar about women and money presented by asset manager Ninety One, it was mentioned that 2 out of 5 women say planning for their financial future is too difficult to think about. This statement is quite concerning, as it seems some women tend to leave financial planning decisions in the hands of their partners.
Statistically women also save less than their male counterparts, because we are more likely to spend our disposable income on children, or parents and other family members.
As women we tend to put other’s needs ahead of our own. Because we are generally the primary caregivers for children and parents/family, we sacrifice our own needs for the wants of others.
To be primary caregivers is a very time-consuming role, it is “unpaid” work that is traditionally the women’s responsibility. It is a form of emotional labour that women do for the household to function. But most of us also have a full-time job which requires a lot of time and energy.
Being both primary caregivers and career women can lead to burnout: physically, emotionally and financially. Even if these roles bring us happiness and fulfilment, if we don’t set boundaries, it can be a huge source of discontent which can affect our mental health and personal relationships.
Chatting to friends you realise that most of us are in the same boat – under pressure to keep our family happy and also be successful in our chosen careers.
How do we spend our time without feeling guilty? Most important (and difficult) is trying to find a balance between family and work responsibilities.
Investing in yourself is not selfish. One way to do this is by taking financial responsibility for your future.
Something I wish I could tell my 25-year old self, is explaining the “magic” of compound interest.
The graph below illustrates the difference that time can make on the ultimate value of your retirement savings.
It shows the difference in the values at age 65 of investing for example R1000 per month from ages 30, 40, 50 (assuming a 10% per annum return). As you can see, the impact of investing the same amount for a longer period of time is quite significant.
Another simple example of the power of compound interest:
If you saved R 1000 pm with no annual increase:
- From birth – you will have R64m at age 65
- From age 21 – you will have R9.5m at age 65
- From age 45 – you will have R840 000 at age 65
So, start saving for yourself and/or your children sooner rather than later.
The financial decisions you make early in life will affect your financial future. This is where wants vs needs plays a significant role, when faced with certain choices, for example whether to buy a new car, or to rather save that money monthly in an investment.
It is particularly important to discuss your finances with your partner/spouse. This will determine how financial responsibilities will be shared, and together you can establish a plan for the future. Revisit/revise this on an ongoing basis.
Women tend to have a more conservative approach in their investment choices.
Time, return and level of risk you take within an investment will influence the outcome.
- With a 5% rate of return, you will double your capital in approximately 14 years.
- With a 7% rate of return, you will double your capital in approximately 10 years.
The above illustrates that with a slightly higher risk approach in long term investments, you can potentially improve the investment return and future value.
Time and the power of compound Interest can help you reach your financial goals.
A short-term goal is a holiday – invest this in a less volatile asset classes/portfolios.
A long-term goal is your retirement – invest for this in more aggressive asset classes/portfolios.
October wa Mental Wellness Month. We have to be more aware of our overall wellness. Remember that you can’t pour from an empty cup. In other words, look after yourself mentally, emotionally and physically, so you are able to care for the people around you. Stress, tension, burnout or other mental challenges will have an impact on your financial situation. Get help if you need it and get a plan in place to build your wealth.
* Leslie Greyling is a financial advisor at Brenthurst Wealth Fourways [email protected]
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