We have written before about the “pink tax” where products targeted at women are often sold at a premium to the same products aimed at men.
Thankfully, when it comes to financial planning, there should be no difference to the costs of the service or the methodology used – each financial plan should be tailored to the specific and unique needs of every individual, regardless of gender.
However, there are a few things that women need to consider when making plans for a secure and happy future which allows them the financial freedom they would like and the ability to pursue their passions throughout life.
Firstly, women should remember that on average they live long lives – usually longer than male partners. This means that they need to make their money last longer if they are to remain comfortable, especially when they stop working and/or earning an income. According to the Office of National Statistics, women retiring at 65 can expect on average to live for another 21.1 years, but we all know of women who live happily into their 90s. There is little point in considering averages, YOU may not be average! Early retirees and those with long lived families and “healthy genes” may need to plan for retirements which may last for 40 years or more!
Secondly, although traditional “homemaker” and “caregiver” stereotypes for women are changing, women may still take time away from work to have children, raise their families, or be primary caregivers for family members or loved ones. This will affect their pensions and their ongoing ability to save money for a secure and independent future.
Then there is the much discussed “gender pay gap” – don’t get us started on that one!
These facts alone make it clear that women have some special considerations to make when it comes to their financial planning – our experience and the tips below will allow women to take control of their financial situation, become financially independent and live the lives they want and deserve.
Our Top Tips
- Plan, plan, plan!
You will never get to where you want to be without knowing how you are going to get there, but it is important to think about the lifestyle you want to live and its associated cost, BEFORE you start making financial arrangements. Many people buy savings plans and make investments without considering how much they will need in the future and when. Consequently, such arrangements may be inappropriate – maybe taking too much or too little risk, inadequate savings amounts, inflexible policies etc. When you have made a robust plan for your future, you can them determine what you need to do to realise it more effectively.
It is important to remember that you don’t have to be wealthy to create a financial plan. Everyone has to start somewhere, but where you end up, is determined by the plans you make and the successful adherence to them.
- Save.
Thinking about the points raised above, it is important to start saving as soon as possible. It is not too soon to save a few pounds from a Saturday job while still at school – the very first pound you save will be the one that grows the most as it will be invested for the longest time. This is why pensions are so valuable, because the money has been invested for a long time and so will have grown most. (It is also helpful to know that the Government boosts pension funds as an incentive to saving for your retirement, so for every 80p you save, it adds at least another 20p.)
But we don’t just want to save for retirement – we want to save for holidays, new shoes, a nice meal with friends etc etc. Don’t be tempted to put these things on credit cards with sky high interest rates which mean that the cost of your treat has exploded. Also don’t be sucked in by peer pressure – if you can’t afford to do or buy something, stand firm and say so. Many women who look like they have perfect lives – the newest fashions and handbags etc, also have horrendous credit and debt problems.
- Pay yourself first.
Saving will be most effective if you get used to setting some money aside on a regular basis BEFORE using it for something else. Those people who only save money IF there is something left at the end of the month, are much less successful than those who save in a disciplined manner (eg by direct debit into a savings or investment account) as soon as they are paid.
Paying yourself first means that you can stay true to your financial plan and hold yourself to account when it comes to staying on track to achieve your future lifestyle objectives.
- Control.
Take control of your (and your family) finances, or work with your partner on this. Do not fall into the trap that many women do, of letting their partner (usually the man) deal with the finances. It is important that everyone can be financially independent just in case something goes wrong – divorce, premature death etc. Unfortunately, we have a great deal of experience in working with surprised divorcees and bereaved widows who have little clue about the family financial situation. It is important to know where money is held, who insures the house and car and any passwords allowing access to funds.
- Cover the risks.
No one likes to pay insurance premiums if they can help it, but in the same way that we insure our cars and houses, we should also insure our lives and health and income if we can afford to do so. If we do not, and things go wrong, our hopes and dreams for the future could be shattered and our financial plan will be rendered meaningless.
By protecting yourself in advance, you are also protecting your finances and, in turn, your future.
While planning for the future is important for everyone, women have special considerations to make. But those looking to make the most of their financial futures shouldn’t let the challenges they face hold them back from getting on track toward their best lives. Financial planning — whether solo or with the assistance of a professional, can make a significant difference.
Depending on what you want in your future life, you may choose to DIY or work with a financial planner who can help you make robust plans and hold your accountable to these plans so that you are more likely to achieve your objectives.
If you select the latter option, do call us for a friendly chat – we understand the financial ambitions and concerns of women and will work with you to make sure you are comfortable and well informed.