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Ladies, let me ask you some questions:
If you have answered yes to any of the above questions, you are certainly not alone, millions of women around the world are in the same boat. As I pointed out in yesterday’s blog post women are still at a significant disadvantage to men when it comes to financial planning. This is confirmed by an OECD report on financial literacy that found that while women are better than men at short term money management, they save less and accumulate less wealth than men.
Common problems are that women:
It is just as critical for women as it is for men to take control of your finances to ensure that you are secure throughout your life. Here’s our eight point plan to getting your finances in order:
We all like to think that we are in control but unfortunately unexpected events can occur which seriously affect our financial situation. Start saving for an emergency financial fund which can be used to cover short-term outgoings should you find yourself unable to work for any reason. Enough to cover your expenses for six months is a good amount to aim for. This should be kept in an easily accessible bank account.
In the UK, 1 in 3 women have no pension at all, and those who do are saving significantly less than men. If you don’t already have one, whatever your age, you should start saving into a pension to ensure your financial wellbeing once you retire. Do not rely on a state pension as this will not be enough for you to live off comfortably. If you are employed, you may find that you can benefit from both tax relief and employer contributions on your pension.
There are three types of insurance which you should consider taking out to protect your savings and assets. Health insurance is essential, especially for expats, to ensure that you have access to costly private care should you need it. In addition, consider critical illness cover which will pay out a tax-free lump sum if you are diagnosed with certain conditions such as cancer, heart attack or stroke. The money can be used for treatment, or to tide you over a period when you are unable to work. Finally, life insurance is a must for anyone with financial commitments such as a mortgage or dependents who would be left vulnerable should you die.
You might find finances boring and prefer to bury your head in the sand rather than face up to your financial responsibilities but it is important to educate yourself to a certain level of financial literacy. Knowledge is power and understanding the financial decisions that you have to make will ensure that you make confident decisions. There are lots of organisations and websites targeted specifically at women which are useful resources.
If you don’t know where you are going, how will you ever get there? Most people never reach their goals because they don’t define them and plot a way to achieve them. Goal setting is absolutely key to robust financial health.
Too many women leave the finances to their men but a man is not a plan! Even if you and your partner are rock solid, at some point one of you will have to manage without the other and with women enjoying longer life expectancy than men, it’s more likely to be you. Make sure you are fully engaged with the finances of your family, discuss financial issues with your partner, and divide up regular financial duties such as monthly bill paying between you.
Keep your finances well organised and managing them will become less of a chore. Create individual files for your bank statements, credit card bills, mortgage information, pensions summaries and other financial information and file new paperwork as it comes in so you always know how to lay your hands on everything.
If you find the whole process of organising your financial affairs overwhelming, you might like to seek professional advice from a financial advisor who can help you establish your goals and keep you on track to achieving them, advise on insurance issues, help you decide where to invest your savings and generally keep your finances in tip top condition.
If you would like help with your financial plan Infinity offer a free initial consultation and advice of structuring your finances so please get in touch today.