How to fix your financial future in six easy ways

The lockdown is easing but there are still tough 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 pleased to queue for hours so we can stroke real clothes in a real shop. But it seems that what we are not doing enough of is thinking about how to repair 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. It seems we can talk until the cows come how about the gender pay gap, and the issues of inequality that manifest, but it’s about time we talked about another glaring inequality – the gap financial ability. Closing this gap is essential to ensure our financial independence.

Although we have made great strides in many areas, there are still great strides to be made in terms of financial independence and building more focus on our financial strategies. Stunning figures from UBS Global Wealth Management showed that 58% of women left critical financial decisions up to their male partners, and women aged 20-34 were the most likely to do so. Pretty bleak reading, eh.

This trend puts many of us at financial risk and has a huge impact on how we manage and deal with our money. We need to manage our money and become more confident in having conversations about money and most importantly, develop our own financial plans.

Diane Watson runs an enterprise called She can thrive which is dedicated to helping us become masters of our financial future, and provides some key pieces of advice that 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 responsibility for and own your situation. Although it may seem like the easy route to hand over responsibility to a partner or family member, in the long run, it only leaves you vulnerable as you are completely unaware of your situation .

2. Get more involved in your financial planning

Only 23% of women globally are currently responsible for long-term financial planning decisions. You need to set goals and aspirations for where you want to be and what you need to do to get there.

It is essential to carry out cash flow modeling to understand your liquidity and prepare emergency plans in case your position is ever compromised, to protect you in the short and long term.

Also, make sure you 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 that you are still prepared for the future.

3. Make the time

It can be easy to leave financial planning on the back burner. But if you leave it too long, it can often be too late.

I have worked with women, whose partners have died and they had no knowledge that they were not included in the will, they assumed they were. Which means no pension, estate or insurance payments were transferred, leaving them without a home.

4. Understand your future worth

Determining your financial future also means you need to have an insight into your employment pension and decide your pension age. Once you have decided on an appropriate retirement age, calculate how much workplace pension you expect to receive by this point. Is this figure combined with the government pension enough to get by?

With the average life expectancy for UK women at 83, there is a long time to plan for it. If it’s not as much as you expected, you need to take steps to build this figure.

5. Information about partner funding

Many women have been left in vulnerable situations after divorce or partners dying. With the sad fact that 1 out of 2 of all marriages end in divorce, you have to be prepared and you cannot give up financial responsibility to partners. Many women have no idea what they are entitled to and in some cases stay in unhappy marriages because they fear 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 after they 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 pass to you? Would you need to sell the house to be financially stable? Do you understand your part in the partnership?

6. Do it for yourself

Last but not least, you need to take control completely for your own personal benefit. 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 essential that women become more independent and avoid depending on a spouse or family member.

Being more financially aware and financially involved means you have more control over your financial well-being and let’s face it, who doesn’t want that?

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