When life deals you lemons, make money instead – advice for women in transition

28 August 2019

Women face a number of challenges and transition between the ages of 25 and 69. Some of these challenges can be attributed to the financial transitions they experience. These transitions can range from landing their first job, marriage, childbirth, losing a spouse through divorce or death, retrenchment, terminal illness and retirement. Both women and men may experience these financial transitions, but they may hit women harder because it is proven that women generally live longer than men, and in honour of Women’s Month, we will be focusing specifically on financial transitions in the context of the South African woman.

We look at some of these transitions, and how you can adapt to each situation in an attempt to ease and improve the situation for you.

Divorce and widowhood

Divorce and widowhood have a bigger impact on women than men because research shows that South African women still earn 25% less than men. When a woman loses her husband, she will be solely responsible for the household responsibilities and financial obligations.

This often means that you have to rework your budget. Find out if you can reduce your expenses, and find more investment opportunities to prepare for a future where you are the sole breadwinner.

Although the marital home is full of memories and a haven for children, emotion should not get in the way of your financial future. You could save money by selling the house and downscaling if keeping it poses a financial risk. Keep in mind that bond repayments could become solely your responsibility if ownership is transferred to you.

It is also important to keep in mind that no matter how comfortable your current situation is, things can change at any moment. It is therefore vital to put essential financial measures in place such as making sure relevant life insurance policies are up to date, relevant Wills are up to date, and that you have credit life cover in place on your debt obligations.

If you go through a divorce, soon after splitting up, make sure your Will and life policies are updated with new beneficiaries. You don’t want your ex to inherit your assets one day.

If you’re married in community of property, you must also remember that you’re entitled to 50% of your spouse’s pension fund if you get divorced. The pension will be taxed if you take the benefit in cash. Also read other conditions of the Pension Fund Act to see if your claim meets the criteria.

If you inherit your spouse’s belongings when he dies, don’t waste it. Rather speak to an advisor about financial planning to ensure you spend it wisely.

Continue living your best life when you retire

Planning for retirement is particularly challenging for women because of the pay gap. Ideally, you should start saving for your retirement as soon as you start earning an income. If that is not the case, you should double your contributions to ensure that you retire comfortably. Putting away 15% of your income will ensure that you retire comfortably.

At retirement, you will only be allowed to take one third of your investment as cash, and the remainder must be invested in another product that will provide you with a monthly income. Make sure you choose the right retirement product for your needs.

Be prepared for terminal Illness

When you’re ill, the last thing you want to think about is money. Even though the lack of it can make you even sicker. Ensure that you don’t miss your medical aid’s monthly contributions while you’re sick, and ensure that your life policies are up to date.

If you don’t have a Will in place, ask someone to help you draw one – just in case you don’t make it. You don’t want your loved ones to fight over your possessions when you’re not there.

Life goes on even after retrenchment

Being retrenched can be stressful, especially if you have debt to pay off. But there are so many products that cater to you while you are dealing with the ordeal – for instance life insurance and credit life insurance. Credit life insurance is always tied to your credit agreements to help you pay off your debt in the case of retrenchment, disability, and death.

In addition to this, check if your life policy does cover retrenchment. If so, use the money to pay for your expenses while you are looking for a new job.

Do not live beyond your means

 If you are living beyond your means and taking out more credit than you can afford, being forced into a situation where you are now solely responsible for the finances when the obligations were previously shared could result in financial devastation. Ensure that you take charge of your debt, and if you are struggling to keep up with debt repayments, take the necessary steps such as seeking a debt management solution. Debt counselling can guide you to debt freedom and lift the burden of debt by providing an affordable, restructured repayment plan.

 DebtBusters can ensure debt does not become one of your challenges. If you find yourself struggling with your debt, contact us and we will lift the burden for you. Call us on 086 999 0606 or email us at info@debtbusters.co.za.