Updated: Nov 17, 2021
It is important to shine the spotlight on some of the difficult conversations that many women need to have in order to take ownership of their journey. One such topic is money and financial freedom.
An article in US financial magazine Barron’s notes that while there are many women who are financially savvy, systemic issues – including entrenched roles – hold others back. The same happens in same-sex couples, where one partner relinquishes control to the other.
“A number of women delay or hand over financial planning responsibilities, or understanding of their financial affairs, to someone else,” says Tamryn Lamb, Head of Retail Distribution at Allan Gray.
“However, taking control of your own finances will give you confidence, allow you to take on more risk in other areas of your life, and help give you more choices,” she notes.
“Women are often hailed for being thoughtful, disciplined savers, and less impulsive than men. Rather than weaknesses, these are strengths that can be leveraged in building and sticking to a financial plan,” she says, adding that there are still too few high-profile examples of women investors, but fortunately the numbers are on the rise.
What holds us back from taking the financial reins?
“Many of us struggle to take the first step. There are multiple reasons for this. For some, taking control of this area can seem overwhelming; for others, there are so many conflicting priorities, that finances fall down the list. We believe there will be time – and extra resources – in the future,” Lamb notes, adding that getting started is key.
Nomi Bodlani, Head of Strategic Markets at Allan Gray, believes that what makes it difficult to prioritise our future is that it is very hard for us to relate to it.
“Research shows that when we think about our future self, the activity in our brains displays similar patterns to when we think about complete strangers. So not only does long-term investing success require enduring short-term sacrifice, but you must do so for what seems like a complete stranger.”
How to own your financial throne
Bodlani says that one of the best defences against the tendency towards immediate gratification and “present bias” is to make sure you have a system in place that makes it easier to prioritise long-term goals.
And, while women are usually great multitaskers – balancing home, careers, children, and being partners – putting a financial plan or system in place is often easier said than done, especially when doing it alone.
“Consider getting a professional involved to help you, whether a financial coach or adviser. A qualified outsider’s perspective is key. This person will help you understand what the behaviours are that are holding you back, as well as help you stick to your plan and goals when the ‘going gets tough’,” says Lamb.
She adds that it is important that you make sure you really own, and are thinking about, how to get to financial independence. Below are some practical steps you can take to start your journey:
Create a budget
A budget allows you to get a clear view of your current financial situation. By monitoring and tracking your spending you can identify and curb bad spending habits, take control of your debt and make more room to invest. Creating a budget is the best way to help you allocate future funds optimally.
Establish a plan
Once your budget is in place, you are out of the starting blocks, and ready to define your goals and create a robust financial plan. A well-rounded financial plan should make provision for an emergency fund that enables you to respond to life’s unplanned expenses without compromising your financial standing. It should also include an investment plan.
Research the different options available to you before deciding which products are best suited for your investment goals, for example, you may wish to save for retirement with a retirement annuity. It is also useful to try and identify the obstacles that could derail your intentions, and how you will manage these. If all of this sounds daunting, consult a financial adviser.
Automate actions that align with your plan
Schedule automated investments in the form of debit orders and set up annual escalations in advance. Review your progress and your plan on a defined schedule and avoid making decisions that are not triggered by your deliberate review or a change in circumstances.
Commit to giving your decisions time and space
Be deliberate about distancing yourself from your emotions, or external triggers, when making decisions that impact your long-term plan. Always make sure to consult investment truths and trusted sources of relevant information.
“Your future lifestyle depends on the choices you make today. Take the reins, take it one step at a time and adopt a long-term approach,” concludes Bodlani.