In Western society the traditional roles of man as breadwinner and woman as caregiver have become blurred. However, they still apply quite strictly in many cultures and remain relatively entrenched in South Africa.
Discrimination against women in the workplace is forbidden and the pay parity gap is closing quickly. Therefore ongoing disparities between men and women in overall financial position and financial literacy must largely be the result of this lingering differentiation of roles, especially among older generations.
For example, if a woman takes a few years out of her career to care for her newborn children, it follows that her lifetime earnings will be lower and her retirement savings lower, even assuming she doesn’t cash in her savings, is able to resume her career at the same level, and is paid the same as a man in a similar position. Further, she may still depend on her husband to take responsibility for the household finances, so her financial knowledge may remain relatively poor.
Single mothers
What remains shocking, for me, in our society, is the plight of women with children whose fathers are out of the picture. Sadly, in a large proportion of cases, the fathers have abdicated their responsibility to support their children, leaving the mothers juggling roles of both breadwinner and caregiver. That is a huge burden on one person’s shoulders. I believe this is where regulators and civil society could be directing more attention. Appallingly, men continue to wriggle out of their maintenance obligations.
Single mothers face enormous financial stress, which can lead to acts of desperation. There’s the recent heart-wrenching story of the woman of Butterworth, KwaZulu-Natal, who hanged herself after killing her three children. It turns out that JK Rowling, before her Harry Potter books brought her fame and untold fortune, considered suicide as a struggling single mom.
The 2023 Old Mutual Savings and Investment Monitor looked at the plight of single moms.
The survey of 1 518 urban working South Africans found that:
- 15% of respondents were single mothers;
- 47% of them did not receive paternal support;
- 61% felt high stress against 52% of all women and 40% of men;
- 62% had dipped into savings to make ends meet;
- 56% had to borrow from family or friends;
- 44% had taken out a personal loan to cover their expenses; and
- 24% had borrowed from a stokvel.
Investors and savers
Where women do take responsibility for household or personal finances, it appears they are often more successful than men, because they tend to be more cautious with money and more diligent savers and investors.
A recent customer survey by TymeBank showed that the majority (54%) of customers with fixed deposits were women. Greg Illgner, chief strategy officer at TymeBank, says the reasons could include the fact that “more than 40% of South African women are single mothers, thus putting money into a fixed deposit after they have raised some capital can help them, for example, have enough for their children’s education.
“Single mothers need to rely on their own incomes for everything a family needs, both in the short and longer term,” Illgner says.
In 2018 the Financial Times reported on a study of pension fund savings in the UK by Nest Insight and Vanguard. After adjusting for differences in earnings, it found that women saved a higher proportion of their income than men in all brackets but the top income bracket, where the difference was negligible.
Other studies have found that women are more successful investors than men. In a recent article, “What makes women better investors?”, Chantal Marx, investment research head at FNB Wealth and Investments, says Warwick Business School in the UK found that, among stock market investors between 2012 and 2016, the annual return by men was 0.14% above the performance of the London Stock Market’s FTSE100 Index versus a 1.94% annual gain achieved by women. In another study, by UK investment platform Hargreaves Lansdown, women investors returned 0.81% on average more than men over three years. Over 30 years, this difference would result in a 25% higher investment value.
Citing further research, Marx gives the following reasons for the difference in performance:
- Women are more risk-conscious.
- Women leave their investments alone.
- Women are better at letting go when they should, meaning they are less likely to hold on to losers, hoping for a turnaround in fortune. “Overconfidence is a major emotional bias inhibiting investment success. Being less certain could lead to more research on buying (and selling) decisions,” Marx says.
- Women may show less interest in investing fads or trends.
Coincidentally, the 2023 Old Mutual Savings and Investment Monitor study found that:
- 48% of women versus 62% of men are likely to invest in cryptocurrencies;
- 47% of women versus 60% of men had an appetite for investing offshore; and
- 23% of women versus 11% of men indicated they were not prepared to take financial risks.
Financial advice
In a blog penned for Women’s Month last year, “Strategic financial management for women is highly effective”, Sue Torr, managing director of advisory firm Crue Invest in Cape Town, says that women should seek financial advice that takes into account their unique needs. “Women should be encouraged to take concrete steps early on to strategically manage their finances through the various life stages that are unique to women. A positive first step is to find an adviser who understands and appreciates the specific needs and challenges that women face, and who demonstrates a genuine understanding of your lifestyle goals. Together with your adviser, you should be able to develop a long-term strategy for financial independence which is flexible, robust and tailor-made for your unique purposes,” Torr says.
PERSONAL FINANCE