Forward Planning: Greater financial security for women

Controlling personal finance is a real challenge for many. The inability to make timely and sound financial decisions plague both men and women but negatively affects women much more than men.

Only recently have women started to be more empowered by understanding their own economic value whether they are domestic engineers or working people with earning power. Equal pay for men and women for the same jobs performed is still not a reality in many countries. In societies like here, finance is generally the responsibility of the breadwinner and not the wife.

Even when the wife is working, both partners usually have problems in managing their personal finances which makes their future financial security uncertain. Unmarried women face greater difficulty as, if single by 21, they have great chances of remaining so. Even in the West, women are more likely to die single as the majority will either be divorced or widowed.

US statistics show that about 6 per cent don't get married, 33 per cent get divorced and 47 per cent become widows. These women will eventually face very difficult times if a financial plan is not established and applied to control their personal finance.

To ensure their future, women - whether single or not - must understand what their assets are (property, cash, shares, and others), their debts (credit card, car loan, mortgage, unpaid bills, money owed to others), their monthly budget and spending pattern, saving and investing and their earning power.

Priority

They must identify their financial needs and establish financial goals and objectives accordingly. We are becoming a model consumer society where unwise spending must be controlled.

Local women must change their financial behaviour, become responsible and educated in personal finance. Financial hardship certainly won't decrease in the future especially if taxes are introduced some day.

Empowering women financially first requires understanding the need for taking serious measures and decisions to control personal finance. Debt management is essential to eliminate financial waste.

Debt should not be created in the first place unless absolutely necessary. When considering a loan, shop around for the lowest interest rate and discuss all details thoroughly to avoid surprises.

Don't borrow more than you can afford (total payments shouldn't be more than 25 per cent of salary). If you find yourself with too much to pay, consolidate debts with an institution offering the lowest interest rate and easy instalments. Keep credit cards at home and don't buy just "because you want", but only if you need to.

The best debt you will ever make is by taking a mortgage and buying your own home. With property ownership being allowed for all in Dubai, women can also acquire their own property if their income level allows it. If your current rent is Dh35,000 or more, consider buying and stop paying rent. As a rule, save, save, and then save some more.

Being thrifty is good financial behaviour which leads to future capital availability for important goals such as starting your own business, sending children to college, etc. Resist spending on temptations and enjoy looking at things without having to own them. Save a set amount of money (7 per cent to 10 per cent of your salary) at the beginning of the month, put it aside, then make do with the rest.

Also, establish an emergency fund equal to six months' pay for any emergency such as fixing the car, home repair or paying for medical expenses.

Insurance

Buy life insurance with saving elements and flexible features to provide financial protection. Invest a regular amount of money at regular intervals for greater future benefit. Utilise professional help - financial consultant, financial planner, investment adviser, insurance agent, insurance consultant and investment broker.

Check they are licensed by the competent authority. Also ask for a proper financial plan before you decide anything. Remember that if it sounds too good to be true it probably is, so take another opinion or call the authorities for verification because you are in no position to lose your lifetime savings and become a victim.

Be aware of fly-by-night foreign-based self-proclaimed advisors who may leave you penniless as they vanish from the country.

Establish a will and proper estate planning. Many people die without arranging for the distribution of their assets or finding ways to minimise financial liabilities for their heirs. Guardians must be appointed to oversee the proper execution of the deceased's will. Find a good lawyer to consult with and take legal advice.

The author is a UAE-based insurance consultant and director of Gulf Insurance Consulting