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Why women should make more time for financial planning

Whether you’ve taken a career break or have been completely work-focussed, our financial plans for the future can often take a back seat. Which is why we asked April Parrish, Financial Advisor at Corbridge wealth protection firm Emerald Associates, for some expert advice.

Written by High Life North
Published 11.08.2022

By April Parrish

More women are shattering the glass ceiling every day as they take their careers to new heights.

The number of women on FTSE boards is rising, while more women are striking out on their own to become self-employed entrepreneurs. However, many women still tell me that they’re not confident in making good financial plans.

As a gender, we are capable, ambitious and have a strong work ethic. It’s these attributes that are helping us climb the corporate ladder as well as carve out niches to work for ourselves. Imagine what we could do if we applied those same strengths to managing our money.

An important aspect when seeking support with our financial planning is being aware and keeping control. Even high earners can end up financially insecure if they don’t take responsibility for their own financial lives. Sometimes, we find that women fall into traditional relationship roles where one partner makes the decisions and family money is not managed together as a team. The end result can be that women only realise the true state of their finances after a divorce or the death of their spouse, by which point it could be too late to address any issues – such as poorly performing investments, or not having enough saved for retirement.

 

WHAT ARE THE FIRST STEPS TO TAKING FINANCIAL RESPONSIBILITY? 

To start with, women should be focusing on three main areas to ensure they have the makings of a solid financial plan:

Protecting your current wealth

Many women are aware they need some form of personal protection. However, when it comes to insuring ourselves, our focus is very often on life cover to repay the mortgage if we die and critical illness cover to protect us in the event of life-threatening illnesses, such as cancer or heart disease.

In general, women are much more likely to be off work for an extended period of time because of ‘everyday’ conditions, such as a bad back or work-related stress. And although some employers offer generous sick-pay schemes, they aren’t guaranteed, which means many employees will be reliant on statutory sick pay (SSP).

When you’re thinking about how much insurance to buy, it’s also important to consider not just your financial contribution to the household finances and the money you are putting away for your future, but also all that unpaid work.

If, for example, you couldn’t work or run around after the kids, the dog, maybe even your parents, who else would? Whether it’s childcare, dog walking or tending to older relatives, this unpaid work you do without batting an eyelid might need to be paid for if you weren’t able to do it.

It’s not just about the amount of protection insurance you buy, it’s about making sure that you’ve got the right type – so that you’re covered whatever life throws at you. As well as protecting yourself, what if your children became seriously ill? Could you afford to take time away from work to care for them, or do you have savings to rely on? How long would your savings last?

You can arrange these policies yourself, but it’s not always easy to get it right. That’s where a regular protection review can really help.

I always say that protection provides the foundation of your financial plan and, once it’s sorted – and your safety net is in place – you’re free to focus on achieving your bigger, more exciting financial goals.

Retirement Planning

None of us want to work forever and, with the state pension age creeping up to age 68 by 2028, it’s important to think about what age you would like to stop working. What does that look like? What will you spend your time doing? How much would that cost?

Women in employed roles may be a member of their workplace pension scheme. However, for the self-employed among us, this may be a benefit that you don’t have access to. This is where a Personal Pension Plan comes in. The government currently offers tax relief on pension contributions of up to £40,000 per annum or 100% of your earnings, whichever is lower, at your marginal rate. This makes pensions a highly tax efficient way to save money over the long term.

For those with a workplace scheme it’s important to know as much about your scheme as possible. Who is the provider, what are your contribution levels, what are your funds invested in and, most importantly, will it be enough? I often come across women who have either taken a career break or worked part-time to raise their children; or, alternatively, have been so career-focussed that their own finances have taken a back seat. Both of these can result in a gender pension gap, meaning we have significantly less in our pension pots than our male counterparts. With retirement lasting 30+ years now, this could cause a problem in the future.

The earlier you begin planning and saving for retirement, the better. But if you find yourself mid-career and unsure of whether you have enough set aside for retirement, all is not lost. You can still ensure your plans catch up with your dreams, but you might have to do things a little differently.

Speaking to a Financial Adviser can help you answer any questions and make sure you have the knowledge to make that dream retirement a reality.

Investing your money

It’s always important to remember that life is for living! If you looked back 10 years from now, what would you want to have achieved? Would you have liked to have bought your first house? Bought a bigger house? Expanded your business? Funded private school fees for your children? All these things cost money and require a robust plan to get you there.

Financial security is a major goal for many women, and the poor interest rates on savings accounts mean now is the ideal time to consider investing. A Stocks & Shares ISA provides a more flexible and active introduction to investing.

Saving little and often – say, £150 a month – reduces risk and enables you to take advantage of something called pound-cost averaging. When you invest this way, falling markets don’t have to be bad news; it just means the following month you’ll buy up more units for your money, leaving you better placed to benefit when markets hopefully bounce back.

When it comes to investing, it’s sometimes easy to be put off by the risk and the jargon, but it’s not a right or wrong, black, or white decision: it’s about doing ‘something’ rather than nothing. It doesn’t necessarily matter whether your investment is the best performer or not. It’s about taking your first step on a journey and starting to see your money work harder for you. The number one thing that will stop you from reaching your goals is doing nothing!

Of course, there is a degree of research and effort involved in choosing a Stocks & Shares ISA and deciding what to hold in it, which is where we can help and take some of the decision-making off your to-do list.

SO, HOW DO WE IMPROVE OUR CONFIDENCE AROUND FINANCIAL PLANNING?

I would encourage all women to start a conversation. Start having frank and open discussions with your friends about money. What are they doing with their savings?

Are they putting money into a pension? You’ll probably find the conversation, however uncomfortable it might initially feel, empowers and inspires you both.

Women like to ask lots of questions and we, quite rightly, need to understand the pros and cons before making decisions. However, it’s important to acknowledge that we are also time-poor! Because of this, it’s important to have a financial adviser by your side to help you make informed decisions – someone who can give a personalised experience and transparent, accurate information, all while making it a time-saving convenience.

A good adviser will be non-judgemental and prepared to answer any question you can throw at them, creating the perfect environment for you to learn and gain confidence.

 

If you would like to talk about creating a strong financial plan for yourself, your family or your business, get in touch for a no-obligation chat. You can call me on 01434 303726, email me at april.parrish@sjpp.co.uk or find more information on the Emerald Associates website

I also have an upcoming event around the importance of ‘Financial Planning for Women’.  If you would like more information, please email april.parrish@sjpp.co.uk

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