Financial Planning

Financial inequality is exacerbated by the pandemic

Charnel Ernstzen, Managing Director of National Debt Advisors (NDA)

The Covid-19 pandemic has taken a heavier financial toll on women than it has on men. Even before Coronavirus arrived, there was clear evidence of entrenched economic disparity – and the pandemic has widened the gap. According to recent research released from advisory firm PWC, women in top leadership roles at SA’s largest firms are earning 72c for every R1 earned by their counterparts.

Charnel Ernstzen, Managing Director of National Debt Advisors (NDA), says it is evident that women were hardest hit financially in the months that followed the initial lockdown in March 2020, whether it be as a result of a reduction in work hours, job losses or retrenchments. “We have seen many of our female clients report a change in circumstance with regards to their income. A loss or reduction in income affects someone’s ability to cover living expenses, service their debt, and plan for the future.”

A research survey by the 2021 Old Mutual Savings & Investment Monitor (OMSIM) shows that 63% of the women surveyed said they are feeling highly stressed, versus 53% of men. Only 26% of women were shown to feel confident about the SA economy, compared to 40% of men, who had, overall, a more positive outlook.

Ernstzen believes that much of this has to do with a slower recovery in employment for women, than men. “More of our male clients report being back to pre-Covid working hours, than our female clients.” 

Moreover, women bore the brunt of Covid’s impact on the schooling system, which saw them having to navigate working, schooling and caregiving responsibilities. “Gender inequality in the workspace has definitely been exacerbated during the pandemic, with women once again getting the short end of the stick,” says Ernstzen.

However, Ernstzen says she is heartened by the fact that more and more women seem to have taken the bull by the horns during this pandemic and followed their entrepreneurial spirit. “The dire need to find additional income has spurred females to start their own businesses, whether as a primary source of income or a side hustle. This means that more and more women are taking charge of their finances.”

it is evident from the client interaction at NDA that women carry more emotional and historical baggage when it comes to money. “Not many South African women grew up in households where they were exposed to positive conversations about money. Women may have managed the money, but men were ‘in charge’ of it. With more and more women single-handedly running households and contributing significantly to a two-income household, this narrative is changing,” says Ernstzen.

In the spirit of Women’s Month, Ernstzen shares some top financial tips for females:

  • Become informed

Make the effort to become informed about money via various platforms. Read articles. Listen to podcasts. Watch videos. Ask questions. The more informed you are, the better decisions you will be able make.

  • Make the effort to be involved in every aspect of money in the home

Ensure that you are aware of the household finances. Make sure that you know all the details of your debt, your accounts, your home loans, and your insurance policies. Many women, who stay in the background of money matters in the home, find themselves in the dark when death, divorce or separation from a partner takes place.

  • Draw up a budget and speak to your family about it

A budget will not only be beneficial to your finances – but it will also give you a sense of control and increase your confidence. If your budget is not working – have the confidence to discuss this with your partner and the rest of the family. 

  • Set goals and start saving

Whether you have investments, a savings account or even if you just have your money saved in a jar – set a savings goal and work towards it.  An amount of as little as R50 per month can start a good savings habit.  If Covid-19 has taught us anything, it is the importance of savings, especially in case of an emergency.

  • Get a money buddy

For whatever reasons, you may not feel comfortable to speak to your husband/ partner about money. However, it is important that you become comfortable speaking about money. Find someone who you can trust to speak to about your finances – as well as who you can learn from.

  • Make the effort to un-clutter your finances like you do your closet

When clothes don’t fit or we haven’t worn them in a while – we sort through them and oftentimes give them away, to make space for that which can be better utilised. We should be doing the same with our finances. Get out your statements and identify insurance duplications, unused subscriptions and unnecessary service fees and bank charges.

  • Minimise your debt

Getting rid of even the smallest amount of debt, frees up cash which can be injected into savings or used for everyday living expenses. If your debt is manageable, and you can tackle it on your own, it is advisable to use one of the following methods.

o   Snowball method: You start paying off your smaller debts first. Psychologically, this method works well – because there is a real sense of achievement when you can square up an account, close it and move onto the next one.

o   Avalanche method: With this method, you pay off your debt with the highest interest rate, first.  Then move onto the next one. You’ll save money in the long run by keeping interest charges under control.

  1. First, make the minimum payments on all your debts. Then put any additional money towards the debt with the highest interest rate. 
  2. Do this until the highest -interest account is paid off.
  3. Thereafter, take the minimum payment you were paying on the first debt, as well as any additional cash, and put that toward the debt with the next-highest interest
  • Debt counselling

If you are skipping payments and find that you do not have enough money for your living expenses, you might want to consider the National Credit Regulator (NCR)-monitored debt review process. It is vitally important that you only use a debt counsellor who is credible and registered with the NCR. Consumers who run into problems with debt counselling, often do so more because of their choice of debt counsellor, than the process of debt review.

“Even in the face of economic inequality, persistent prejudice, lack of support, opportunities, and resources – women continue to rise to the occasion by showing resilience, creativity and an innate strength that can only be admired. We urge women to take control of their finances, by getting on top of their savings and their debt,” concludes Ernstzen.







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