#Adulting
We think it is safe to say that nobody is coming out of 2020 financially fitter than before. We asked some experts for advice.
TIMES ARE TIGHT. SHOULD WE BE SAVING FOR SCHOOLING?
”If you do not save for school uniforms, school fees and all the dozens of extras, this money will have to come out of your monthly cash flow that, in turn, limits what you can put away for your own retirement,” says Neil Thompson, head of product and customer value proposition at African Bank. Keep this in mind too: In order to compete in the job market one day, your child will need some form of tertiary education, which is not cheap. Thousands of university students never complete their studies because of financial difficulties. Start saving for education as soon as you can. Neil says parents who are serious about growing their money should look for a flexible savings account. This type of account means your money is not tied up for lengthy periods, and you still have access to your savings while earning interest. Even a small deposit every month will grow over time.
THE LOCKDOWN WAS LIKE BEING ROBBED! I NEVER WANT THIS TO HAPPEN AGAIN.
Neil says there are six important Covid-19 money lessons we can all take away from the past year:
1 Saving for emergencies is very important.
2 Having the right funeral cover in place is very important.
3 Good medical care when you need it is priceless.
4 Being open and honest with creditors when you fall on hard times is important.
5 Being able to continue providing for your child’s education in hard times is important.
6 Taking time off to enjoy a family holiday is important.
”Five of these tips are a lifeline to good financial health, now and in the future,” Neil says. ”The sixth tip – family holidays – is a lifeline to good mental and spiritual health and also an opportunity for the family, as you grow older together, to all save and commit financially towards these special occasions.”
I HAD A BABY, AND MY MEDICAL SAVINGS RAN OUT! I DIDN’T EVEN KNOW IT COULD. I SOMMER FEEL LIKE CANCELLING IT!
Medical expense shortfalls from medical aids during pregnancy are often significant. The current climate is only making matters worse. Gap cover can help to ease some of the financial stress while dealing with a pandemic, says Tony Singleton, CEO at Turnberry Management Risk Solutions. ”Often, pregnancy and childbirth result in unanticipated medical expenses, which could leave young families in greater financial distress if they do not have medical aid. Even with medical aid, you are not guaranteed full cover,” says Tony. However, parents trying for a child must understand that gap cover needs to be taken out before falling pregnant as waiting periods do apply. Tony says many people were tempted to cancel their medical aid altogether, as they face pay cuts or worse. However, this could result in long-term financial difficulties. At the very least, try to have a hospital plan.
WE’RE FLAT BROKE. CAN WE STILL GET GOOD MEDICAL CARE SOMEHOW?
Instead of consulting ”Dr Google”, rather invest in a reputable, telephone-based advice service, which can potentially save you a lot of time and money.
Dr Iqbal Karbanee, CEO of Paed-IQ BabyLine, says that on average new parents visit doctors, paediatricians or clinics for routine check-ups at least six times in their baby’s first year. Non-routine visits during this time can easily double this number. ”This is because most first-time parents struggle to know if their newborn’s behaviour is normal, or if their baby is sick.” He explains that on average, babies get sick approximately between eight and ten times per year in their first three years of life; if a child goes to nursery school or crèche, this number can double. The cost of medical consultations in a baby’s first three years can therefore quickly escalate. ”Some new parents actually don’t know how to identify the difference between a common complaint that can be treated with home care, or a life-threatening situation that urgently requires a trip to the emergency room,” Dr Karbanee says. In both instances, parents need help to guide them on the most appropriate course of action, yet global research suggests that in 71 percent of cases, visits to an emergency room are unnecessary. Similarly, in at least 70 percent of calls taken by Paed-IQ BabyLine, children do not need to see a physician, and the recommended treatment is simple homecare.
Family holidays are a lifeline to good mental and spiritual health.
SINGLE? YOU NEED TO BE EVEN SMARTER.
The National Income Dynamics Study Coronavirus Rapid Mobile Survey reveals that of the three million South Africans who lost their jobs between February and April 2020, two million were women.
It’s clear that ”not only are women at a serious economic disadvantage to start with, but single mothers in particular shoulder enormous responsibility for the wellbeing and financial security of their families – with little or no help,” says Pat Magadla, senior business development manager at Old Mutual Investment Group. According to the 2020 Old Mutual Savings and Investment Monitor Covid-19 Special Report, 41 percent of women with children consider themselves single moms, and 60 percent of them receive no financial contribution at all from the fathers of their children. This is up from 47 percent in 2019.
Don’t let your financial planning be neglected. You simply have to start an emergency fund and increase your savings. Pat has a good idea of how to start: With tax season upon us, commit to saving any refund you get.
Also be on the lookout for luxuries you could do without, or do less frequently, like DSTV or takeaways or hairdressing. More tips: Work at reducing your debt, and start working on that side hustle now.
STILL GOT SOME CASH? MAKE IT WORK FOR YOU!
”It is one thing to earn money but another to manage and make it work for your future,” says Sarika Maharaj, product manager at African Bank.
Just being financially independent is not enough to be truly empowered. Sarika says women ”are generally very comfortable meeting household budgets and are great at making their money stretch. Particularly during this pandemic we have seen many examples of money-savvy women who have effectively, consciously or sub-consciously managed their money quite well. And yet, they are still reluctant to engage in investment decisions.”
Don’t outsource financial responsibility to the man in your life because it feels easier. Sarika has some pointers for taking charge:
■ Anyone can learn about finances. Make sure you educate yourself about basic financial management and investment. For example, you should always be clear about what your interest rates are, and if you have investment accounts, you should be informed about how they are performing.
■ Actively participating in your family’s financial decisions, irrespective of your marital status, is a sure-shot way to take control of finances.
■ Be wary of taking on the responsibility of your partner’s debt. Sharing your debt can keep you from making financial headway as a couple. Prenuptial agreements are a way to protect you from debt cycles. A good way to make sure you and your partner are financially safe is by taking the option of credit life cover, which will help to insure you both, so that you are able to meet your credit obligations should something unforeseen happen.
■ Tackle pay parity by negotiating better: On average, women in South Africa earn 25 percent less than men, even though South Africa is still one of the more equalpaying countries in the world – it is 19th out of 149 countries. The gender pay gap starts to widen from the age of 26, with the largest difference being between the ages of 36 and 44 (33 percent). ”Women need to negotiate as aggressively as their male counterparts would do,” Sarika says.
PREGNANT? UNINSURED?
And not keen on state hospitals? Then here’s our top tip: The Birthing Team provides affordable private maternity care to women who are uninsured. Their all-inclusive fee covers all necessary scans, tests, medication and consultations, including hospital costs for the delivery, based on the allocated care plan. They are currently operational at Netcare Park Lane in Johannesburg, Netcare Femina in Pretoria, Netcare Pholoso in Polokwane and JMH City Hospital in Durban, with more sites planned. Visit thebirthingteam.com for more information. ●