Why financial planning is important for women
This content is for information purposes only and should not be taken as financial advice. Every effort has been made to ensure the information is correct and up-to-date at the time of writing. For personalised and regulated advice regarding your situation, please consult an independent financial adviser here at Castlegate in Grantham, Lincolnshire or other local offices.
Financial planning is valuable for everyone. Yet British women often face unique challenges that need addressing if they are to reach their goals. Below, our Grantham financial planners show why is it important for women to have a financial plan and offer ideas on how to get started. We hope this content is helpful. If you want to discuss your financial plan with us, please get in touch to arrange a no-obligation financial consultation, at our expense:
01476 855 585
info@casfin.co.uk
Why is financial planning different for British women?
British women often need to account for specific challenges in a financial plan such as longer average life expectancy, the possibility of single motherhood and lower career earnings. The UK government estimates that UK males live 82.3 years on average, yet women may live for 85.5 years or even longer. This means that a woman’s retirement savings may need to stretch over more time compared to a man. However, this is hampered by the gender pay gap, which still stands between 5.45% – 9.71% in 2023. Lower earnings can mean lower pension contributions over a woman’s career, undermining her future retirement savings.
Women are also more likely to suffer financial hardship after divorce or separation. Currently, around 90% of single parents are women and over half of the children in these families live in relative poverty. Another factor to think about is pension planning. Around 39% of women plan to rely on their partner’s pension when they retire, compared to 23% of men. Yet premature death or divorce could put these plans into jeopardy. In summary, women are more likely to earn less than men, are more likely to build up lower pension savings and are at higher risk of financial instability or hardship if they fall upon hard times.
How can women craft a financial plan?
Financial planning for women takes into account the distinct challenges that women may face throughout their lives – putting measures in place to address them and still progress towards their goals. You might start by asking yourself some uncomfortable but important questions, like: “How can I ensure that I do not fall behind with my pension savings?” or “How can I protect my budget and long-term finances if something goes wrong, such as an injury which stops me from working?”
Younger women might consider how having children could impact their future goals. Would you take a career break to look after them, or would you expect to share childcare responsibilities with your partner? How could you protect your budget on maternity pay and continue building up a pension? Older women might ponder what would happen to their retirement income if their partner suddenly died. If you rely on their pension, would it still provide benefits to you?
Financial planning helps women find answers to these big “what if” questions and gain a clearer sense of their current position. In turn, you can then start to plot a course to achieve your future goals. A good first step is to review your existing income and expenses. Do you have a firm grip on your budget and could you optimise it to put more towards savings and investments? A good second step is to check your financial protection profile. Do you have an “emergency buffer” of easy-access savings (e.g. 3-6 months’ worth of living costs) that could help sustain you during a difficult time, such as losing your job? After this, turn your attention towards the future.
What are your long-term goals? Do you want to live off your investments and no longer need to work? Do you envision having a partner and perhaps starting a family? What might retirement look like? It is perfectly fine if you do not know the answers to these questions. Yet exploring the range of possibilities can help to focus your attention on building up the wealth you need to keep your options open. Identifying potential risks to your goals, moreover, can assist in crafting a suitable financial protection plan. For instance, if there is a risk that your own pension savings might suffer by deciding to stay at home with your kids, could your partner help you contribute to your own pension pot? This could offer tax savings, since each person is entitled to tax relief on their contributions. It could also help to protect your future retirement goals if, say, your partner dies first or you split up. Naturally, talking about this with your partner could be awkward or difficult. A financial planner can help you find the right words and even help you both craft a joint financial plan, helping you work towards your shared financial goals as a couple.
Finally, consider investing in your own financial education. The more you know about investing, taxes, money management and pensions, the more confident you will feel about taking control of your own financial goals. Getting guidance from a financial planner can certainly help. Yet there is also much you can do on your own.
Invitation
If you are interested in discussing your own financial plan or investment strategy with us, please get in touch to arrange a no-commitment financial consultation at our expense:
01476 855 585
info@casfin.co.uk
