Today, Friday, March 8, 2013, several events will take place all over the world to mark the International Women’s Day, to celebrate their economic, political and social achievements. Traditional gender roles have presented household income from a perspective where women were expected to stay at home and look after children. Economic reality today means that most families must rely on more than one income to achieve even the most basic family goals of educating children, modest living, and planning for ones retirement and estate.
At the 2010 Fortune Most Powerful Women Summit in Washington, DC, where he honoured accomplished women, Barack Obama stated that women, half of America’s workforce, are primary or co-breadwinners in two-thirds of American families. One wonders what Nigerian statistics reveal.
Indeed, women in Nigeria are earning and contributing a significant part of the household income, sometimes even assuming the role of primary earner. This social phenomenon has financial, emotional and psychological implications for both men and women, particularly in a patriarchal society with its traditional views.
Traditional role reversals can be disconcerting, and can lead to frustration or resentment as an increased financial burden is placed on women on the one hand and potentially bruised male egos on the other, if such issues are not addressed as a partnership in the family setting.
While the general principles of personal financial planning are universal and apply to both genders, women face unique challenges that translate to distinct concerns regarding their earning potential, roles and responsibilities. Women generally have a longer life expectancy and are more likely to live alone for significant periods of time. Workforce participation can be intermittent, and the care of dependants, children and aged parents, usually falls on women.
In Suze Orman’s book, “Women & Money: Owning the Power to Control Your Destiny,” she illustrated what she termed “dysfunctional scenarios.”
• A successful working woman who contributes a sizeable portion – in many cases the majority – of the family income, but delegates all financial responsibility and decision-making to her spouse or partner.
• A stay-at-home mom or non-working spouse who relies on an “allowance” from her husband who controls all money matters.
• A wife, sister, who is talented and accomplished in her career, but is constantly frustrated at being passed over for a promotion or not earning what her male counterparts are earning.
• A grandmother or aunt who doesn’t know much about money or about the family finances. If anything happens to her husband she could be in dire straights.
Whatever your age, or stage and whether you are single, married, divorced, or widowed, here are some issues to consider as a woman to enable you create a more stable financial future:
One of the greatest threats to your financial well-being is having little or no involvement in the decision-making relating to your finances. While delegating responsibility might be important for the dynamics of a relationship, it can put you at risk and render you ill equipped to handle financial matters in the unfortunate event of divorce, serious illness or death of a spouse. Many women have no idea where financial records are, or find that they are broke or deeply in debt.
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 a educational fund for your children, or funding your retirement, setting goals brings you closer to achieving them.
Do you know where your money goes? If you don’t already have a budget, try to make 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.
Be in control of your debt. Millions of people are in a dire financial situation today because they borrowed more than they can afford to repay. 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.
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 education or for a business.
Build 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.
Consider investing in stocks where you have a long-term time frame. Bear in mind that stock market investments, whilst they have provided higher returns over the long term than money market funds, come with greater risk. By spreading your investments across the primary asset classes you can mitigate some of the risk.
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, be restrained and teach them to distinguish between wants and needs. This will help prepare them to lead disciplined lives and save you from having dependent adult children during your retirement years.
Have you been planning for your retirement or have you ignored it and suddenly find it looming? Your retirement 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.
Estate planning is an emotive subject, and in Nigeria, the fear of death often prevents many of us from making plans for this most inevitable life event. Things may be going rather well, so why dwell on morbid thoughts such as your own death? Yet, by considering your own mortality and getting your affairs in order, you have peace of mind and cushion the impact for your loved ones should anything happen to you. Joint accounts, wills, trusts, gifts and life insurance are some of the tools to consider.
Don’t neglect your insurance. Reduce the risk of loss using appropriate insurance to protect the things you can’t afford to lose. This could be your home, or your car or other property. Life insurance is important where your family depends heavily on your income. Without adequate insurance, an accident, a medical emergency, a fire or other disaster your financial security could be undermined.
There is no excuse these days for being totally ignorant about your finances with the plethora of information around you. You don’t have to become an expert in financial matters but at a minimum you should have some basic knowledge of the principles and the options available. Do seek guidance from an experienced, qualified professional, but remember that ultimately, you are responsible for your finances and the final decision, is yours.