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Load-shedding. Unemployment. Uncertainty. Fear.

Things are looking bleak and there doesn’t seem to be an end in sight to the bad news. Self employed individuals will probably feel the pinch the most during this period and many businesses may not survive the crippling effects of intermittent power supply, among other things. There are many challenges facing self-employed individuals but two of them are of interest to me – how to manage personal finances, particularly during this tough economic environment, and how to practice self-care while on this journey.

Managing your finances while self-employed is a job on its own. For most start-ups, there is no steady income in the beginning and that must be managed with a lot of consideration. A few things to consider:

• An emergency fund – whether you’re self-employed or not, you should have some reserves in an accessible account, in the event of emergencies. It becomes even more imperative when your income is uncertain, as with self-employment
• Prioritising expenses – you need to order your expenses in terms of priority and reduce your budget to essentials, as far as possible
• Downscaling – you’ll need to make some hard decisions in order to manage your costs. When you are running your own business, downscaling things like bank accounts and mobile phone plans becomes a requirement. Scrutinize every aspect of your lifestyle and make that call, for the sake of keeping costs low
• Insurance – when the business is dependant on you for income generation and its survival in general, being adequately insured becomes a necessity. Make sure that your personal and business insurance needs are taken care of
• Retirement planning – with uncertain income, it is quite easy to neglect retirement and saving. You must select products that will allow you the flexibility to contribute as and when you have the finances to do so. You also need to speak to a professional about working out your retirement capital sufficiency. This will give you an idea about how far you are from your target
• Increase your income streams – having multiple income streams is a hedging strategy. This will help to alleviate the cash crunch and stress at any given time. The first trick is to find them. The second is to maintain them.

The issue of self-care is a difficult one. Entrepreneurs, in general, prioritize their businesses often at the expense of their health and well-being. According to the Gallup Wellbeing Index, mental health directly or indirectly affected 72% of the entrepreneurs sampled, including those with a personal mental health history and family mental health history. This study also found that entrepreneurs are more likely than other groups to experience depression, ADHD, addiction and bi-polar. Many find it difficult to manage the uncertainty and many disappointments that come with the territory.

As an entrepreneur, it is important to know what your triggers are and to realize when you’re doing too much.  

Bontle admits that finances were the undoing of her marriage. ‘The strain of our finances weighed heavily on us for 11 years. Throughout our marriage, we had financial peace for about 3 years.  We even started entertaining buying our first house together, but that idea was short lived.’

They fought about money all the time.  This is what led to their divorce.  Neither of them had the money for a protracted divorce battle so they went to the Magistrate’s court to get an instant divorce. It took all of 12 hours to finalise.

Bontle didn’t fight the maintenance order out of concern for her ex-husband since she made more money than he did at the time. The result of that was an unfair settlement that is now coming back to haunt her. The children are in her custody and she foots the bill for everything. She’s had to move back to her parent’s home, she’s funding the bulk of the cost of raising their children, she’s had to let go of a business she was running and had to sell her car due to affordability reasons.

‘The only relief is that we had a roof over our heads, food in our belly and public transport to get around’, she explains. ‘My regret in terms of how I started my marriage was purely from a financial perspective.  We needed to sit down and have a look at what we are both bringing into the marriage (debt and income), who was going to be responsible for what, where the money would come from etc’. 

Bontle now has a very different perspective about money. The pain and struggle with money in the past has forced her to think and behave differently regarding her finances. She has decided to own her situation and actively take control of every aspect of her finances. ‘I am paying off each and every one of my debts diligently.  I even managed to buy a car cash after my divorce and I plan to move us out of my parents’ house soon.’  

This is what Bontle says she has learned from her divorce:

• One of the most important conversations to have with a partner/would-be-spouse is about money. Don’t shy away from it. Confront this head-on long before committing to someone
• Discuss up-front how much you earn and decide, based on that, what you will be responsible for financially. Have individual and joint budgets. Keep talking to each other about money
• Discuss marital regimes honestly. Decide together what the best marital contract will be for you and consult a professional to advise you. Bontle was married in community of property and this was largely due to pressure from extended family members. She paid the price for this
• Update your will, life cover and retirement benefit details as often as your circumstances change
• Plan your finances for after the divorce. Seek the services of a financial advisor to help you transition from married to single life. Even though Bontle gets some spousal support, she plans as a single parent
• Be prepared to downscale. Invariably, costs tend to rise when you’re footing the bill alone. Make provisions for that and try not to make emotional decisions.

The reality is that divorce is painful but it doesn’t have to devastate you financially. It all starts with having healthy, realistic discussions about money and for you to plan adequately for every possible outcome. For Bontle, this was a major eye-opener. She’s had to hit rock bottom financially for her to realise that she cannot avoid the topic of money any longer. She is now having frank conversations about money with her eldest child and is working with us to help her improve her financial situation.

It can only get better from here.

Bontle completed her matric with average marks and could not get into varsity.  She went to KellyGreenoaks for a 1-year course in Public Relations.  It took her 6 months to find her first job which paid R1500 per month as a Secretary / Receptionist for a new firm of attorneys. She started studying part time through Unisa for a BA HR degree and her career in HR was born. 

In 2004, she met a nice guy and fell pregnant and decided to get married.  ‘At this point I have moved out of my parents’ house and have my own car, but my money management is not great.  I do not save, I pretty much spend every cent on paying for a car and rent on an apartment in Fourways I can barely afford’, she explains.

By her own admission, she and her husband ‘wing it’. She says they never really discussed financial responsibilities and expectations until things fell apart and drastically so. Even with their financial hardships, the topic of money was still avoided.  Her solution to their problem was to get back to work and to work herself to the bone to make ends meet.  ‘We did reasonably well for two people who were financial delinquents.  Seven years later we have our second child, a baby boy, who was a complete surprise’, she continues.

Three major life events happened in Bontle’s adult life that warranted a major shift in how she dealt with money – she got married and had two children. Had she known better, she would have had a discussion with her husband about the impact that these events were going to have on their finances. The second and most important thing to do, would have been to plan, budget and save for these events. Not once before, during or after these events, did she have any frank conversations about her or her husband’s financial standing, what their aspirations were as individuals, as a couple or even as parents.

She grew up this way and was trying her best with the little knowledge that she had. Her behaviour with money as an adult is consistent with her initial introduction to it – avoidance. I don’t know her ex-husband but I can say with a lot of certainty that he was probably raised in exactly the same way that Bontle was. This is how most us were raised around money. The effects of this on our lives today are testimony to that.

I know very few people who enter into holy matrimony with the view to get divorced. Marriage is often entered into with a positive outlook and big dreams for the future with hardly any consideration of the potential for things going pear-shaped. The reality is that divorce is more prevalent than ever before, not just in South Africa but internationally too.

According to Stats SA, 44,4% of the divorces registered in 2016, were of marriages that lasted less than 10 years. 31,7% of the black African group, 25,4% of coloureds, 25,0% of whites and 22,4% of Indian/Asian couples who divorced had marriages that lasted between five and nine years.

Because of this, you have to get into marriage, not only with rose tinted glasses, but also with a plan that will leave both parties financially stable, in the event of a split. Not terribly romantic but realistic and absolutely vital.

I met a really interesting young lady recently who got divorced in 2018. Bontle, a 38-year-old woman from Soweto, spoke to me candidly about her experience and its effects on her finances. She has agreed to share some of her learnings and reflections about her finances pre ,during and post her marriage over the next few weeks, in the hopes that it will help many women like her juggling money and life.

Her background is similar many of ours – she’s the first of three girls in her family with two very hard-working parents who did the best they could under very difficult circumstances. Her mom, like many black mothers, was part of a stokvel where she diligently saved money throughout the year for home improvements and other luxuries over the December festive period. Her dad worked his way up in financial services where he learned about saving and investing and managed to build a comfortable nest egg for their retirement. Ironically, with all this information they had, neither of her parents ever discussed money openly with Bontle and her sisters.

This is our story.

Our country’s history of segregation and economic exclusion has led us to this point. Many young people who now have tertiary education and the many who have moved out of the homes and townships they grew up in are usually the first to do so in their families. This comes with a lot of pressure and expectation to support and assist their siblings, ageing parents and often, extended families as well. This, and quite obviously so, comes at a great price and has often meant that individuals end up living way above their means and seldom have any funds left for saving and investing.

When black tax is spoken of, it is almost always in a negative light and it seems to me that our conversations around it don’t seem to progress beyond the financial burden it places on the provider. The reality is that a bulk of the country’s population is living below the poverty line and the vast majority of those people are black. That means, invariably, that black tax is here to stay. At least for the foreseeable future.

I think we need to try to elevate our conversations about family support beyond the cash contributions. Conversations need to be had about the benefits of personal financial management, regardless of the quantum in question. There is almost always a more optimal way to allocate money and maybe it’s time we recognised that we need help and for us to seek the services of a professional. Preferably, someone who understands the nuances and complexities of being upwardly mobile while black. I think we need financial literacy programmes specifically designed for families in these situations. Parents, siblings, children and extended families all need to be in the same room together and for money to be spoken of and how it affects every single individual. There needs to be an understanding that the provider has finite resources and that the recipients also need to be conscientious about their demands and spending habits.

It need not be a burdensome task. Giving back and helping those less fortunate than yourself should be celebrated and encouraged. Because at the end of the day, when one person succeeds, we all do.