As a panelist at the global Financial Literacy and Education Summit, to be held in Chicago on April 17, I will be joining other personal finance journalists from around the world to provide a perspective on women and financial literacy.
This has led my thoughts to the issue of women and money – what issues do women face in South Africa and what experiences do we share with other countries?
There are two societal structures that make women inherently more financially vulnerable than men. Firstly women earn less. The FinMark Trust Financial Vulnerability Index found that women are more financially vulnerable than men because women on average still earn less than men. A Career 24 survey found that the average salary for a woman was 30% lower than the average salary for a male.
Secondly many women are alone in supporting their children. A survey conducted for the Old Mutual Savings and Investment Monitor found that out of the urban working mothers interviewed, 56% were single mothers. In a single-mom household, only about one in two fathers make a financial contribution for their children and only 21% make a contribution on a regular basis.
A survey by a large debt-counseling company found that 75% of female applicants for debt review are single mothers of which less than 35% receive any maintenance at all from the fathers and less than 10% receive regular maintenance.
It is not surprising that so many single mothers are facing a debt crisis considering that, according to Old Mutual, a woman earning R15 000 a month and raising a child on her own could not come out on her salary, let alone have extra money to save for her retirement or an emergency savings fund. Single mothers literally live from pay cheque to pay cheque.
It will be interesting to see if this experience is shared by other countries or if South Africa has a particularly high prevalence of mothers as the sole breadwinner.
A trend that seems to be prevalent across the globe is a lack of confidence by women when investing their money. Research in the US has found that women typically avoid more “risky” investments such as shares and also are generally less confident in their money management skills. The Visa Women Money Matters survey conducted in South Africa found that 57% of women get their advice either from their partner or family member and only 27% use a financial advisor. It also found that only 2% of women invest directly in shares. When asked about their worst investment decisions, “buying shares” topped the list. Women tend to prefer cash and property as their main investment. Although this more cautious approach means fewer women are taken in by scams, it has serious consequences on long-term retirement savings as women do not have enough exposure to growth assets, yet tend to live seven years longer than men in retirement.
The good news that I will be sharing at the global summit is that this trend is changing in South Africa. As employment opportunities improve for women, we are seeing an increase in women’s desire for financial independence. More women are seeking financial education, women tend to outnumber men at financial workshops and ask the tougher questions. This is creating an environment not only to improve women’s financial literacy, but to improve the financial health South Africa’s many women-led households. Through her role as a caregiver, a woman’s impact on her community is significant. By empowering a woman, you empower a community.
If you have any questions or comments on women and financial literacy you would like to have raised at the Summit tweet questions to @mayaonmoney and use the event hashtag #FinLitSummit. Key questions received via Twitter will be answered by the panel during the live webcast discussion.