Women And Money: What Every Woman Needs To Know

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Women and men do not have the same relationship when it comes to money. For one, women are likely to have less of it. According to the International Labour Organisation (ILO), the gender pay gap stands at 20 per cent, meaning women workers earn 80 per cent of what men do. For women with children, the gap is even greater.

The disparity in income and roles in the workplace mean that women are likely to have less savings and are generally more hesitant to take risks when it comes to investing. Even though financial security is important to women, they are not proactive in securing their financial future for various reasons.

As we welcome International Women’s Day on March 8, here’s what every woman needs to consider in order to secure (and expand) her finances.

1. A man is not a financial plan

The notion that the only control a woman can have over her financial destiny is by securing a rich husband has been trumpeted across cultures since the beginning of time.

Unfortunately, even the most successful marriages can end, either in divorce or death. No we’re not talking murder, statistically women also tend to outlive their male counterparts. Either way, if a woman financially depends solely on her husband or men in her family, she can be left vulnerable when that support disappears. This can happen through death, divorce or one of may unforeseen life circumstances.

A dual-income stream, if managed properly, will allow couples to increase their financial security and forge a sound retirement plan.

2. Take control over your finances

In other words, don’t give your spouse total control of your money! Some women may be more than happy to let their husbands or partners handle all the accounting, mortgaging and bill paying in the household.

However, keeping your finger on the finances can ensure your financial independence and know-how. Women and money may seem an unlikely coupling, but your husband or boyfriend may not be around to take care of you forever. It is important for you to learn to function on your own.

3. Those little bundles of love come with a price tag

Having children is expensive. Raising them, feeding them, paying for their school fees and those concert tickets… it can add up fast. Most parents know that raising a child isn’t cheap, but many are still shocked to see the bottom line. You can learn more about how much it costs to raise a child and start planning your savings.

If you already have children, it may not be a bad idea for you and your partner to get life insurance, and of course, to start thinking about ways to save for your child’s education! This goes without saying, the earlier you start, the better.

4. Don’t overlook financial compatibility

Differences in money management styles can ruin a relationship. This is because when you marry your significant other, you are marrying his or her financial habits (or baggage) as well. Financial incompatibility is a leading cause of divorce in the United States.

Before tying the knot, it is important for couples to have a serious (and honest) discussion about their current financial standings, spending habits and attitudes about money. How do you perceive spending, debt, making major purchases and the use of credit cards? Such information will help you reassess your long-term financial plans and help avoid conflict in the future.

5. Your health is your most important asset

Your health is as vital to your finances as your job is. If you are sick, you can’t go to work. If you can’t work, you can’t save and may even become a burden to your loved ones.

Having health insurance can help mitigate financial risk that can result from deteriorating health or terminal illness. One trip to the emergency ward can deplete your lifetime savings and put you in debt for years to come. Hence, it is important to factor in the costs of healthcare when evaluating your living expenses.

6. Saving for retirement is a must

Retirement is expensive. Experts estimate that you will need at least two-thirds of your pre-retirement income to maintain your current standard of living when you stop working.

Many of us have started to plan for retirement via the Employees Provident Fund (EPF). However, according to EPF statistics, an estimated 50% of retirees exhaust all their EPF money within five years of retirement.

Consider better ways to grow your money such as investing in unit trust funds and real estate investment trusts (REITs) and private retirement schemes (PRS) to generate higher returns. It is also a first step toward building an emergency fund.

7. Know your credit rating

Your credit rating reflects your level of “financial responsibility”. It affects your ability to apply for a credit card, car loans, personal loans and to secure a mortgage.

If your credit rating is poor, you could end up paying a higher interest rate than normal if you were to apply for a loan. If your credit rating is really bad, banks may reduce the amount they lend you or may even reject your application entirely.

Keep your score high by making your payments on time. If you have made late payments, call your creditor and try to have the late fees removed. Your credit rating can make a huge impact on you financially.

8. Stick to fewer pieces of plastic

Credit cards offer payment flexibility, are great for emergencies and generally come with reward features such as rebates or cash back and reward points.

However, having fewer credit cards means having to keep up with fewer annual fees, government tax and interest rates. This may help avoid accumulating credit card debt that can bring down your credit rating.

Credit card rates and features vary from card-to-card, so make sure to choose one that suits your lifestyle best. The best way to find the perfect credit card for you is to compare through our credit card calculator.

If you’ve already taken these steps to improve your finances, that’s great! But if you haven’t, that’s okay – now’s the time to start. Stay present and grounded and realise that you have the power to take charge and own your financial life. Happy International Women’s Day!