Rainy day women

The festive season is always heavy on the purse strings, particularly in current lean times, so it comes as no surprise that 40% of women have made saving money a key resolution for the New Year.

However, according to a recent Australian study*, 56% of women do not save money on a regular basis, while more than half said they would last less than three months on their current savings if they lost their job.

The survey also revealed that a remarkable one in five women admitted that they typically spend all of their monthly pay packet or regularly dip into their savings to make ends meet. Even for those who are setting aside some money each month, it never seems like enough. And far too often, meagre savings get swallowed up by some emergency or obligation.

Commenting on the findings, Robyn Farrell, managing director of 1st for Women says that women work long hours for their hard earned cash and want to get as much out of every rand spent. No one likes to consider the possibility of needing emergency funds, but accidents, illness, and other unforeseen problems do arise. While having a bit of extra money in the bank to afford replacing a household appliance might not be a huge expense, things like medical bills can also be painfully costly. Emergency funds allow you to pay for things without going into massive debt from loans or credit card bills. This money on hand can cover large and small emergencies alike.

Although the number of women with a financial plan in place to achieve their goals has increased from 38% to almost half (47%) since 2008, many women are still finding it difficult to structure a contingency fund. Commenting on these statistics, Farrell says that women need to set a savings goal and commit to cutting back on ‘unnecessary’ spending for the month by only spending money on essential items such as general household bills, rent and mortgage repayments.

As January progresses, it is more important than ever in the current financial climate to stick to New Year’s savings resolutions and adopt a mindset that sees all the monies saved today is money available to spend in the future. “Ideally, the best option is to work with the ‘60% Solution’ which includes setting aside 20% of gross income for life's inevitabilities and 10% for fun. Therefore, in theory, unexpected expenses should be covered, with money left over for savings that can’t be touched,” continues Farrell.

1st for Women has this advice to women wanting to save money on a monthly basis for 2010:

1. Create a budget
   A realistic budget will identify exactly what you are spending your money on, and will help you separate your needs and your wants. It will also show you if you have any extra money to spend on your wants—or how you’ll repay any debt you may decide to incur.
2. Open a savings account
   You will need savings not only for emergencies, but also for the expenses you know you are going to have, for example repairs for your car. Do not rely on high interest rate credit cards to pay for these.
3. Look for ways to save money
   Look out for discounts and sales. This will mean extra money for the things you need—or money to add to your savings account.
4. Use cash, a debit card or a checking account instead of a credit card
   People who use cash for their purchases spend less, so if it’s under R50 or you can eat it or drink it, use cash. Don’t totally buy in to the myth of the “plastic society,” because even if you use a debit or credit card responsibly, you will tend to spend more than if you use cash.
5. Avoid credit card debt
   Remember, the best way to manage debt is to avoid it. Credit card debt at high interest rates with the likelihood that you will pay late-payment and over-limit fees, means that you will pay significantly more for everything you do. Credit cards are not new money, free money or more money. They are just a loan you have to pay back. Remember, if you don’t have any extra money in your budget to repay it within a reasonable time with interest, you can’t afford to incur the debt. And pay your bills on time!