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<p><strong>By: PSG Wealth</strong></p>

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<p>In honour of Women’s Month, PSG Wealth shares some top financial advice for women of all ages, from a few of their female financial advisers.  </p>

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<p>“I believe women should be taught from a young age that it is perfectly in order - and in fact a necessity - to have their own financial plans and goals,” says Riëth Schnetler from PSG Wealth Rietondale Soutpansberg Road in Pretoria (and Top Relationship Manager in the most recent Intellidex Top Private Banks and Wealth Manager Awards).</p>

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<p>“The value of starting early and saving consistently can never be underestimated. In today’s world, as women are building careers and embracing their earning potential, they must also accept the responsibility of effectively managing their finances. This includes to grow your financial intelligence and take control of your financial future.”</p>

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<h3><strong>The early bird…</strong></h3>

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<p>Getting finances right and as early as possible makes all the difference. Denise Fourie from PSG Wealth Silver Lakes, George Central and Mossel Bay Diaz Wealth Management and Stockbroking agrees. “In your 20s, you should be focusing on what you need to do now and throughout your career to reach your ultimate destination. But women tend to postpone or abandon financial planning or leave it to someone else. Rather invest in becoming money wise yourself,” she says. </p>

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<p>Building an emergency fund as early as possible, of three to six months’ worth of income, is essential. Ensuring you can cover a rainy day will mean your financial plans won’t wash away in the process.</p>

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<h3><strong>Inflation can be your biggest enemy</strong></h3>

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<p>While it is important to have liquidity as a feature in your finances, keeping all of your money in a savings account may cost you dearly over the long-term. It might be considered a ‘safe’ bet to stick to the bank (as you won’t see the amount of savings decline), but you will invite inflation to work against you. “Money that doesn’t keep up with inflation won’t grow enough to protect its purchasing power over the longer term,” says Dulcie Weyks from PSG Wealth Pretoria Irene Sovereign Drive. </p>

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<p>Consider the various outcomes if you save your money in a savings account, a fixed deposit or an equity-linked investment, assuming you invest R100 000 for 10 years:</p>

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<figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2020/08/Screenshot-2020-08-26-at-13.25.02.png" alt="" class="wp-image-143818"/></figure>

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<p>“There is more risk of losing money in the investment options, but historically, the reward for investing over the long-term has been worth the risk.” This is certainly true for retirement savings. </p>

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<h3><strong>Good debt versus bad debt and the lifestyle in between</strong></h3>

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<p>Vanessa Alberts from PSG Wealth Pretoria East warns against lifestyle inflation catching up with you. “As your income increases, it’s easy to adopt a more expensive lifestyle resulting in bigger financial commitments. Before you know it, you can’t imagine covering your normal expenses without that extra income,” she says.</p>

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<p>You deserve to celebrate a promotion (especially in the midst of a pandemic), but also ensure you do so within your current budget. Use the opportunity to apply any extra capital towards paying off debt, or to increase savings, perhaps towards your children’s tertiary education. “Paying off debt more quickly or saving means you’re already miles ahead of your friend who buys a new car or upgrades her lifestyle instead,” she adds.</p>

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<p>There is bad debt, but also good debt. The latter may include buying a property, but always try to pay off debt over a shorter period than the original term. Examples of bad debt are clothing accounts or credit card debt carrying high monthly interest that may erode your salary even before you start living. “Try to limit your debt. Avoid carrying the burden of a fancier property dominating your monthly budget, and ideally, try to pay off all your debts before you reach retirement.”</p>

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<h3><strong>Reaching retirement is real but it can be risky</strong></h3>

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<p>As we get older, we often assume our risk-exposure should decrease and follow through to our investment strategy. The reality is that once you retire, your retirement assets need to support you for another two or three decades. </p>

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<p>“For every R4 000 worth of income you need today, you’ll need about R1 000 000 worth of capital, assuming a return of 5% per annum above inflation over time,” says Lynette Wilkinson from PSG Wealth Sandton Grayston. This is a significant amount of savings, but if given enough time, is attainable to reach if you stick to your financial plan.</p>

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<p>As we know, life happens while we’re making other plans, so you need to ensure enough savings will cover the gaps, and professional advice can help you see these more clearly. Risks to your retirement savings include allowing emotions to get the better of you, derailing your long-term objectives over short-term market noise, retiring too early or having unexpected adult dependents relying on your income, among many other factors.</p>

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<p>“It is always advisable to work for as long as possible, and if you are forced to retire, to do part time work or consulting to supplement your income if you can,” she concludes.</p>

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