Get your Finances in Order
Although women tend to be better at financial planning over the short term, long term they are lacking significantly behind men. According to surveys one third of women do not have a pension, and only 15% of women say they understand pensions and how they work. This is compounded by figures from the Women’s Institute of Financial Education (WIFE) which show that women are out of the workforce for an average of ten years.
The Economist has also reported the number of women giving up an income to look after children has increased.
So, to get your long term financial life up to speed here is an action plan you should have implemented yesterday.
Step 1 – Plan for the Worst
The idea behind planning for the worst case scenario is that should this come about you will have a fall back plan to help you. If you rely on a partner to provide a family income for example, have you thought about what you would do if you split up? Or if he or she was to die? How would you provide for you and your family? These concerns can be very real and emotionally horrible should they come into being. To that end make a plan, just in case.
Think about income, health, providing for you and your family, how much you would need to bring in, and then draw up a plan on how you are going to do this.
Step 2 – Set Goals
To help your plan come to fruition set goals. The other items on this list will help you shape your goals, but you’ll have others as well. By having goals which you can mark off the list as you accomplish them, you will feel better about finances and more in control and secure.
Step 3 – Emergency Funds
Having emergency funds to fall back on is a very good idea. These come into play should the worst case scenario happen (see above) and you need some short term cash to pay bills and keep your head above water. If you can muster enough cash to keep you going for about six months, then so much the better.
Step 4 – Pension
The importance of a pension cannot be overstated. Pension management is a specialised field in the financial industry and when you start looking at options you can understand why. The state pension alone will not give you a comfortable quality of life, and so having a private pension not only makes sense but it is a necessity. As highlighted above, relying on a partner’s pension for your retirement is not advisable as we never know what is around the corner.
Step 5 – Insurance
The importance of Insurance cannot be overstated. Most family insurance is grouped together as Peace of Mind Insurance. This comprises of health insurance, critical illness cover, income protection, and life insurance. People tend to skimp on these insurances not believing the worst can happen. That is despite the evidence to the contrary. Friends Life paid out over a £1m in claims in this area every working day in 2013, while in 2012, Zurich Insurance paid out $7m in critical illness payments in the United Arab Emirates alone.
Step 6 – Understand Finances
Understanding the financial world is advisable on a number of levels. Through having an understanding of how the financial world works will empower you to make the right choices. This is important, especially when understanding areas such as income tax and long term investments. It is not as hard as you might believe, and a lot of websites can help you in this regard.
Step 7 – Keep Educated
You may not be in the workplace anymore and your full time job could be looking after your children, but staying educated will ensure that should the worst happen you have a much better chance of landing a well paid job. This does not have to be anything taxing; just something you have an interest in which you could develop into a job if you have to.
Sooner or later your children are going to be leaving home to forge their own paths. What will you do then?
Step 8 – Get Involved in the Family Finances
When all is said and done you simply have to be able to stand on your own. At some point and given that women live longer than men, you could well be on your own. Having to cope with all of this together with the death of your nearest and dearest is no fun. So get up to speed now to make it easier later on. Also, if something unexpected happens, you will not lose out because that hidden investment stays hidden.
Step 9 – Keep Organised and Manage your Money
Through keeping organised you can keep all the information you need in a handy easy to reach place. Have files for your mortgage, pension, credit cards, insurances, investments, and maintaining them regularly will help you keep track of what’s what. It becomes easy to manage once you’re on top of it.
Step 10 – Seek Financial Help
It is a good idea to get financial help especially when you are setting up your finances. Pensions, investments, insurances, are all highly complex areas of life, and for this reason bringing in a trusted finance professional can help you get up and running, and should questions surface later, they can be there to answer them.
In the first instance click here and complete the Call Back Service form. Together we can look at your situation and choose the right financial products to protect you and your family.
For more information, please contact Michele Carby at Holborn Asset Management on +971 50 618 6463 and on e-mail at