Spring Budget and Women
With the changes in the Spring Budget announced on 15th March, it highlighted the need to address the disparity between women and men’s finances once again.
New funding for early education and childcare was a welcome change for many families, especially for mothers. Even in families where the mother was the main earner before having a child, they’re much more likely than their partner to give up work or reduce their hours after becoming a parent. The expansion of childcare support will provide women with more flexibility and a greater opportunity for them to continue thriving in their careers.
We hope that the impact of this will be a reduction in the gender pension gap. On average, by the time women reach retirement age they have built up a smaller pension pot compared to men. Research shows that women tend to require more flexibility throughout their working lives to care for others which often results in lower earnings and therefore smaller pension pots. This can be problematic as women tend to live longer.
Saying this, we think it’s important to focus on some positive changes that women (and men, of course) can make to improve their financial situation.
Striving for financial independence
We define this as moving from feeling overwhelmed by money to feeling more in control; making your own decisions, setting financial priorities, and developing effective habits like budgeting and regular savings to help you achieve your goals.
Working with a financial planner can provide you with greater clarity in the options available to you and the actions needed to provide you with this state of independence.
Don’t be scared of “investing”
It is widely reported that significantly less women than men invest their money or savings, and when they do they take less risk. This can be for a number of reasons; too much choice of investments, no clear signposting of options or the fear of getting back less than they’ve put in.
The impact of this is that inflation, even in normal inflationary periods, will erode the value of savings over the longer term. From our experience, many women will label themselves “cautious” and yet often are unaware that their workplace pensions may be invested within the markets they are actively avoiding. As they feel that this choice is out of their control, they do not perceive this to have the same “risk”.
Being able to link the potential of investment to achieving personal goals is a great way to reconcile these risks. By adopting a balance of investment and cash savings, people can work to resolve their fear of investing.
We also believe that by taking a little time and interest in such affairs, say 10-15 minutes a week to read items on investing, can help to empower you.
Understand your family finances
It is very common for only one partner in a family to manage the finances. When chatting with friends recently, it was surprising how few knew what their partner earned, and I suspect this is fairly common place.
As well as not having a clear idea of “family inflows”, it’s also vital that money is talked about more freely. Do you know all the banking passwords, are you sure your Will is still appropriate (assuming
you have one) and do you know whether you would manage financially in the short term in the event of your partner’s death?
Sharing this responsibility and having a clear understanding of how money impacts both the everyday needs of the family and also the future, can bring clarity and peace of mind.
Taking control of your finances, whatever your gender, will bring you clarity, focus and control.
If you would like more information on how a Financial Planner can help you, please go to www.broadwayfp.co.uk.