Taking care of mom’s money this Mother’s Day and beyond

As we near Mother’s Day this weekend, the focus generally tends to be on spoiling moms. But while celebrating the matriarch in the home is important what is often overlooked is whether she is in fact well cared for financially. But one expert feels that moms need to take care of themselves too and not rely on their partners financially, finds Danielle van Wyk.

Professor Roseanne Murphy da Silva, President of the Actuarial Society of South Africa ‘calls on all mothers to celebrate this Mother’s Day by taking the necessary steps to achieve financial security.’

“As a mother, it gives me enormous peace of mind to know that being in control of my finances means that I’m in a position to help those I care about should the need arise. I have also made sure that I will not place a financial burden on my loved ones as a result of disability, illness or old age,” says Murphy da Silva.

She points that too often partners take care of the financial needs of the family and moms typically get left behind.

“Only by empowering yourself to take your own financial decisions and protecting yourself against unexpected life events can you truly secure your financial independence and protect your loved ones,” says Murphy da Silva.

She offered the following guidelines for moms in taking control of their personal finance:

Possess your own bank account: This is a vital step in obtaining personal financial control.

“Many women fund household expenses from their salaries, believing they can rely on their partner’s investments and savings for their future. Arrangements like this usually end badly for women in the event of divorce or death of the partner.

“Having your own bank account means that you and your partner can share expenses equally. You will then be able to allocate a greater portion of your funds towards your own savings,” Murphy da Silva added.

Plan for your retirement: As equal partners, you and your partner should both have your own investment portfolios and retirement savings tailored to your individual needs, noted Murphy da Silva.

It is an integral part of a joint plan which should be discussed and mutually agreed upon.

She explained that the challenges that face women in terms of providing for themselves into retirement are vast. “For example, women are statistically likely to live longer than men and may therefore need to rely on their retirement savings for many years more.”

In addition, the South African Board for People Practices (SABPP) Women’s Report 2015, found that women earn about 15 % less than men in South Africa. There is also the income challenges that arise with things like maternity and family responsibility leave.

“This means that as a woman, you will have to save a greater percentage of your income than your partner in order to achieve financial security for your whole life. You need to develop an individual retirement saving strategy that will take this into account,” remarked Murphy da Silva.

This takes the recommended average amount of 15 % of pre-tax income investing towards retirement, to 20 % for women.

“You could also consider continuing to work part-time after your retirement. Any savings you can make now will lift the pressure of meeting expenses needed to survive. Working after retirement could then give you some added flexibility and opportunities in terms of your lifestyle and comfort,” she added.

For the most part mothers earning an income can score on tax benefits for their retirement savings by making use of provident funds or annuities. In the case of the unemployed stay-at-home mom, they have the option of making use of a tax-free savings account.

“Tax-free savings accounts allow South Africans to invest up to R30 000 each year tax-free up to a lifetime limit of R500 000, making them an attractive investment vehicle for retirement,” she says. Your husband can invest in a tax-free savings account on your behalf without having to pay donations tax.

“Lastly, it is important not to dip into your retirement savings early, even when you are taking family leave. By accessing these funds, you will lose out on the power of compounding for the growth of your savings and compromise your ability to achieve your retirement goals. Your retirement savings must remain a priority,” Murphy da Silva explains.

Protect both yourself and your family: The foundation of any long-term financial plan is having adequate life insurance, disability cover and medical aid in place to help you cope with any unexpected expenses and to continue to provide for your family, notes Murphy da Silva.

“If anything were to happen to you, you would want the certainty that your loved ones were provided for. Should anything happen to your partner, you will also need to know the details of any policies in order to take the appropriate steps,” she observed.

Another vital consideration for stay-at-home moms should be life and disability cover because of the integral role they play in the home set-up.

“Just because you are not earning an income explicitly, it does not mean that there is no insurable value attached to what you do. Think of all the services that your family would need to purchase if you weren’t around to do them,” said Murphy da Silva.

In the same vein, the consideration and financial planning to ensure that your health needs are taken care of in your old age is an important one. “You should ensure that you and your partner have made allowances for the costs of medical aid in your financial planning to help you cope with health expenses as you grow older,” she advised.

For such planning, a trusted financial advisor is recommended and will be able to guide you in developing a long-term plan to assist you in providing for yourself into retirement.

“As a mother, it’s important to know that you can provide for yourself and for your loved ones, no matter what the future holds. Ultimately, by taking an active interest in your finances and participating in decision-making, you will not only protecting yourself, but ensuring a brighter future for you and your family,” Murphy da Silva says.

Women and finance

Moms should ensure that their own finances are in order but that they in turn pass on financial knowledge to their children, particularly their daughters. “The chances are slim that anyone talked to your grandmother or even your mother about financial issues; indeed it may have even been taboo to discuss money. This needs to change. By simply talking to your daughter about money and introducing relevant topics as she gets older, you will increase her knowledge and, ideally, engage her interest in a subject that will unavoidably be an integral part of her life,” says Standard Bank.

“When your child is young, the basics are the same for both boys and girls, but daughters need to be taught to spot stereotyping and to deflect lingering prejudices about how women ‘should’ act in a relationship.

“From an early age, help your daughter realise that she has a right to education, career opportunities and to be in total control of her money regardless of marital status,” states Nolene Parboo, head of savings and investments at Standard Bank.

“Just because you are not earning an income explicitly, it does not mean that there is no insurable value attached to what you do. Think of all the services that your family would need to purchase if you weren’t around to do them,” she says.