Lockdown's easing but there are still tricky times ahead. Financial planner and founder of She Can Prosper, Diane Watson explains why you need to take control of your money and close the gender financial capability gap
Yes, we’re setting a date to be reunited with our beloved hairdresser again, and yes we’re not too proud to stand in a queue for hours so we can stroke real clothes in a real shop. But it seems what we’re not doing enough of is thinking about how to fix our financial future in a post-pandemic world.
It’s easy to switch off when it comes to dealing with and understanding our finances, but we’re putting our future at risk by ignoring it. Seems we can talk until the cows come how when it comes to the gender pay gap, and the inequality issues that highlights but it’s high time we talked about another blatant inequality – the financial capability gap. Closing this gap is essential to securing our financial independence.
Although we have made great strides within many fields, there are still major moves to be made when it comes to financial independence and building a greater focus on our financial strategies. Startling figures from UBS Global Wealth Management showed that 58% of women left crucial financial decisions up to their male partners, with women between 20-34 being the most likely to do so. Pretty bleak reading, eh.
This trend is putting many of us at financial risk and having a huge impact on how we manage and approach our finances. We need to take control of our money and become more confident when it comes to having conversations around money and most importantly developing our own financial plans.
Diane Watson runs an initiative named She Can Prosper that’s dedicated to helping us become the masters of our financial futures, and gives some key pieces of advice we should all follow if we want to become more financially resilient.
How to fix your financial future
1. Be in control
First things first, own your sh*t. Your personal finances are YOUR responsibility. In order to fix your financial future, you need to take charge and ownership of your situation. Although it can seem like the easy route to pass responsibility onto a partner or a family member, in the long run, it only leaves you vulnerable as your completely unaware of your situation.
2. Be more engaged in your financial planning
Only 23% of women globally are currently taking charge of long-term financial planning decisions. You need to set out aims and aspirations on where you would like to be and what you need to do to get there.
It is vital to conduct cash flow modelling to understand your liquidity and prepare crisis plans in case your situation is ever jeopardised, to protect you in both the short and long term.
Also be sure to track any changes in your circumstances, whether it’s to your job or additional expenses. For example, many women still choose to work part-time after having children to spend more time at home. Once the changes happen, you must adjust your plan to reflect any changes to income, pension or savings so you are still prepared for the future.
3. Make the time
It can be easy to leave financial planning on the backburner. But if you leave it too long, it can often be too late.
I have worked with women, whose partners have passed away and they had no knowledge that they were not included in the will, they just assumed they were. Meaning no pensions, estate or insurance pay-outs were passed on, leaving them without a home.
4. Understand your future worth
Fixing your financial future also means you need to gain insight into your employment pension and decide your pension age. Once you have decided on an appropriate retirement age, calculate the amount of workplace pension you expect to have by this point. Is this figure combined with government pension enough to get by?
With the average life expectancy of UK women being 83 years old, there is a long time to plan for. If there isn’t as much as you anticipated, you need to take action to build this figure.
5. Knowledge of partner’s finance
Many women have been left in vulnerable situations after divorce or partners passing away. With the sad fact that 1 in 2 of all marriages ending in divorce, you have to be prepared and can’t abdicate financial responsibility to partners. Many women have no idea what they are entitled to and in some cases stay in unhappy marriages due to the fear of being left with nothing.
I have worked with clients in the past, whose partner had increased their mortgage debt without their knowledge, leaving them with additional debt once they had divorced or died.
Consider the following types of questions: Do you own the home you live in? Will your partner’s estate and life-insurance be passed on to you? Would you need to sell the house to be financially stable? Do you understand your share in the partnership?
6. Do it for yourself
Last but not least, you need to take control entirely for your own personal gain. The only person who will benefit from being more involved with your personal finances is you, so you need to want to do it for you. It is vital that women become more independent and avoid relying on spouses or family members.
Being more financially aware and involved means you have greater control over your financial well-being and let’s face it, who doesn’t want that?