Mothers make huge sacrifices for their families and often neglect their own needs in the process. One area that is often entirely ignored is their financial security. Sadly, the lack of financial knowledge has the potential to negatively impact not only a woman’s future, but also that of her family.
Women face some unique challenges that translate to distinct concerns regarding their finances in the areas of earning potential, roles and responsibilities. Women live longer and are more likely to live alone for significant periods of time. Workforce participation can be intermittent, and the care of dependents including children and aged parents, usually falls on women.
One of the greatest threats to your financial wellbeing is having little or no involvement in the decision-making relating to your finances. Whilst some women are actively involved in family finances, indeed many are assuming the role of primary breadwinner; studies reveal that many more delegate almost total responsibility to their spouse or partner. Particularly in a patriarchal society like ours, some women suggest that this is important for the dynamics of their relationship. Being a passive partner in family money matters can put women at risk. Indeed, many women find themselves ill-equipped to cope financially if they face divorce, illness or the death of their spouse.
Prioritize your goals and assign them values and target dates. Whether they are short-term goals such as reducing your debt, purchasing a new car or a vacation, or longer-term goals such as purchasing a new home, building an educational fund for your children, or funding your retirement, setting goals brings you closer to achieving them.
ESTABLISH A BUDGET
Do you have a budget? If you don’t already have one in place, try to create one and stick to it. A good budget will help you to monitor your expenses; you will have a clearer idea of where you can cut back and save towards your goals. READ: [How To Create a Family Budget]
BE IN CONTROL OF DEBT
Millions of people are in a dire financial situation today because they borrowed more than they can comfortably afford to repay. Expensive debt that is incurred purely for consumption can dent your future financial prospects; this includes borrowing to pay for clothing, jewelry, consumer goods, and holidays. Try to tackle your most expensive debt first. READ: [10 Deadly Sins of Investing]
Debt needn’t be negative; indeed, credit can be a most effective tool that helps you to create value through well-planned long-term investments. This includes borrowing to buy real estate, finance yours or your children’s education or for your business.
Create an automated savings plan. You will be equipped to cope if you have an emergency fund, a financial cushion to fall back on in times of difficulty. Try to have about six months’ worth of living expenses set aside in a safe, accessible interest bearing money market account.
RISK IS NECESSARY
Women have traditionally been more conservative than men in their investing lives. It is important to consider your risk profile bearing in mind that stock market investments, whilst they have provided higher returns over the long term than money market funds, come with greater risk. Rather than be deterred by the current volatility, take advantage of relatively low prices if you do have the funds to put away. A diversified portfolio will help to mitigate some of this risk. Proactively invest in yourself to gain additional skills through reading or more formal instruction. READ: [Mistakes That Put Your Children at Risk]
FINANCIALLY SAVVY CHILDREN
Bringing up children to develop a healthy attitude towards money as they grow into adulthood requires some commitment and consistency. Even if you can afford to fund everything that your child wants, exercise restraint and teach them to prioritise and distinguish between wants and needs. Encourage them to earn through vacation jobs and internships. This will help prepare them to lead disciplined lives; the last thing you need is to have dependent adult children during your retirement years. READ: [How To Raise Financially Literate Children]
Have you been planning for your retirement? These years should be the time of your life for new and exciting opportunities that will keep you productive, mentally stimulated and fulfilled. Those who start saving and investing early have a much better chance of retiring in comfort.
DON’T NEGLECT INSURANCE
Reduce the risk of loss using appropriate insurance to protect the things you can’t afford to lose such as your home, or your car or other property as well as for the education of children. Life insurance is particularly important for a breadwinner. Without adequate insurance, an accident, a medical emergency, a fire or other disaster your financial security could be undermined.
PLAN FOR YOUR ESTATE
Estate planning is always an emotive subject, and in our society, the fear of death often prevents many of us from making plans for this most inevitable life event. Yet, by considering your own mortality and getting your affairs in order, you give yourself peace of mind and protect your children and loved ones, should anything happen to you, through wills, trusts, joint accounts, gifts and life insurance.
With the plethora of information in both the print and electronic media, there is no excuse for being ignorant about the basic principles of personal finance and the options available. Seek guidance from an experienced professional who will review your situation and advise accordingly. You have an opportunity to influence multiple generations by improving your own knowledge. Remember that ultimately, whatever your age, or stage and whether you are single, married, divorced, or widowed, you are responsible for your financial future.
Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.
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