Investment Strategies to Address Women’s Unique Financial Challenges

 

As women, we face unique financial challenges compared to men:

·      Women are less likely than men to have a savings account

·      Women have less access to formal financial services including savings and investments products

·      Women’s opportunities to make money, save and invest, are hampered by the gender pay gap, which is the difference between median earnings of men and women. Women  in Uganda earn  32.3 per cent  less  than men each  month, for instance.

·      Women’s careers are more likely to be interrupted by time taken off for to provide care for children and aging parents Research shows that mothers are four times more likely than fathers to miss work due to childcare responsibilities. These periods of time off work often result in reduced income, which can make it harder for women to save and invest

·      Women generally live longer than men, which means women need to plan for longer retirements

·      Women generally face higher healthcare costs than men during their lifetime. Women’s unique health needs such as for reproductive health care (think pregnancy and delivery, managing conditions such as fibroids, adenomyosis, menopause, fertility treatments etc) can contribute to higher medical expenses

·      Studies show that women are often less confident when it comes to investing than men. Societal and cultural barriers have historically discouraged women from actively engaging in managing their finances including decisions on when and how to invest, and leave this role to male partners

The more we as women know about finance, from budgeting to investment, the more likely we are to make informed decisions to help us navigate these challenges.

 

Here are some key strategies to consider: 

Upgrade your financial literacy. Financial literacy is the ability to understand and effectively apply various financial skills—including personal finance, budgeting, saving, and investing— to our lives. Financial literacy also involves being able to differentiate good advice from bad, and overall, being in charge of our finances. The more financially literate we are, the more opportunities we have to build wealth and set ourselves up for success over the long term.

Learn to budget. Creating a budget is one of the foundations for meeting financial goals. A budget helps us understand our spending habits; identify leakages that we need to plug including unnecessary expenditures as well as to highlight how much we are saving and investing.

 Prepare for the unexpected:  create an emergency fund. If life has taught us anything, it’s that you never know what financial emergency lies around the corner. A good rule of thumb is to have about three to six months’ worth of your salary saved to cover any unexpected expenses. That way when we come up against an unexpected loss of income from job loss or reduction in earnings, we have a buffer to tide us over as we assess our options.

Pay off debt. Personal finance experts recommend that if you can, make it a priority to pay off debt, especially debt taken to fund consumption (buying a car, going on holiday, buying clothes). Next, prioritize paying off debt related to developmental activities such as school fees. Try and pay more than the minimum payment each month as this will allow you to clear your debt far quicker.

Educate yourself and start to invest. As your financial literacy improves, start to invest. Investing means using your money to buy something that has the potential to grow in value or give you income.

Some examples of investments include:

·      Investing in a unit trust fund

·       Treasury bills and bonds (government securities)

·       Shares in a company (stocks)

·       Real estate (land, rental properties)

Unit trusts and treasury bills and bonds are some of the easiest and lowest level   ways to invest; for most 100,000 UGX is the minimum you need to start. The key is to keep growing your initial investment by continually adding to it.

Invest in a supportive financial network

 Seek friends, family, or colleagues who understand finance and can offer valuable insights. Engage in open discussions about money, sharing your goals and concerns, and leveraging their experiences to make informed decisions.

In the same vein avoid negative people whose only role is to discourage whatever initiative you try.

 

Reach out to a financial advisor to help provide personalized advice and help you make informed decisions.  

  

Plan for retirement

Even if you have just started out or are mid-career, do it. Growing older is a given, so start to plan for it now. Set specific retirement goals, determine the required funds, and establish a savings strategy to achieve those goals.  

 

Seek opportunities to increase your current pay.

·      Invest in your skills through formal education or learn online (many platforms offer free courses). Upskilling can open several doors for you to increase your pay.

·      Start a side hustle if you can.

 By Martha Songa

miss.songa@gmail.com