- Women experience a higher unemployment rate and earn less than men, but are significant contributors to South Africa's GDP.
- According to the Flux Trends Report, women contribute more than 48% to the GDP.
- W24 spoke to Maxine Muller, Liberty's advisory partner, about a personal financial plan, financial considerations for freelancers and building financial independence.
Women have shown themselves to be resilient members of the economy and significant contributors to South Africa's GDP despite proven systemic and social obstacles.
Statistics show women experience a higher unemployment rate and, when they do find employment, earn less than men, yet they daringly pursue entrepreneurship and are significant contributors to the GDP.
According to a Flux Trends Report sourced by Liberty, women contribute more than 48% to SA's GDP, despite these challenges.
Amid these challenges, women need to pay close attention to their financial independence and economic longevity in the face of this exclusionary system.
Maxine Muller, Liberty's advisory partner and a speaker at the Liberty Blue Table Sessions, discusses what a solid personal financial plan looks like, the financial considerations freelancers and entrepreneurs need to consider in a gig economy, as well as cultivating individual financial independence.
Many women are part of the gig economy and have worked from home for longer than the rest of us. What financial mistakes should these freelancers avoid when managing their personal and business finances?
Running my own practice through Liberty and technically being an entrepreneur or "freelancer" myself, I have learnt first-hand what it takes to build a successful career in a gig economy.
Once you start generating revenue, you need to fully understand how it will come in for the next 12, 24, 36 [etc.] months, so that you understand the lifestyle that you can afford at every stage of your career and not spend to the point where all funds are exhausted as they come in. Ensuring that you protect your income earning capacity (i.e. your biggest asset) and building an emergency fund (i.e. 3, 6, 9, 12 months' income) from day one, is vital for the longevity of you being able to freelance.
Do not bank on expected income in the same way as an employee can expect their salary, especially in times such as this – as it is "freelancers" that will be first to go before employees. Your emergency fund should then be able to take care of your needs when things do not go according to plan. Other than an emergency fund, actively contributing towards your retirement as soon as possible is very important.
Another area that is often overlooked from a financial perspective is ensuring that you have clear direction on where you see yourself and your business in the next year, five years and decade to come. With this vision and setting short, medium and long-term goals you are able to plan effectively on how to achieve this by saving towards a goal or investing and creating wealth over time. You will understand what you need to do today to get you closer to where you want to be tomorrow and achieve each of the milestones you set for yourself.
What should a good personal financial plan include?
One should never just have risk cover for the sake of having it because that is where the biggest misconception of what it is there for, comes in. People have no qualms with having short-term or car insurance but if you ask them if they have personal risk insurance they often do not. And a common answer is that they say: "I don't have a bond to cover so I don't need one."
On the other side of the coin others say: "Yes, I have life cover to cover my bond." This is a very common misunderstanding and I truly believe if people fully understood the array of protection and benefits that they can get by putting a plan in place, that is tailored to the risk that they face and changes over time as these risks change, EVERYONE would want risk insurance. The key point is to make sure that it is tailored to your current financial position and priorities.
Women should have their own risk cover regardless of whether they are a corporate executive or home executive, because of all the roles we assume over and above bringing in an income. We need to have our own emergency fund and save for our own retirement and future goals.
As women get older, we are happy as long as everything and everyone else is taken care of and often neglect ourselves to make sure this happens. Self-care should not only be looked at in the form of physically pampering oneself. It takes many different forms and planning to protect your livelihood and grow your wealth as a woman is definitely a form of self-care.
What are the key ways in which women can ensure they are financially independent?
Women more than anything else need to pay themselves FIRST! And I am not alluding to getting those shoes or having your nails done. I am referring to prioritising your emergency fund, retirement and financial plan, as you would school fees or anything else.
If you are not earning your own income and have agreed to being a stay-at-home parent, make sure you fully understand the financial plan that your partner has in place and tailor it to include funds earmarked for you or be a part of the process of putting a plan in place so that your priorities, hopes, dreams and aspirations are taken into account as well. They are still valid. Know your worth and what you bring to the table and make sure that it is accounted for.
Should you require financial advice consult with your financial advisor.
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