5 tips for women to plan their financial future

Here are 5 things women can do to take control of their finances.
The 5 financial tips for women to plan their financial future
Reading time: 5 mins

This might come as a surprise to few, but when it comes to money, women tend to struggle more than men. Let’s have a look at the numbers. According to the latest studies, men earn, on average, 9.6% more than women1. And that’s not all. Not only do women earn less, they also are more likely to work part time and sacrifice their career to take care of their family. The gender pay gap and maternity penalty aren’t without consequences, they can undermine women’s financial independence. For instance, a study reveals that a third of UK women wouldn’t be able to support themselves financially if they were to separate with their partner2. But the financial struggle doesn’t stop there! It sticks with women as they grow older. Despite a longer lifespan, women tend to have less money than men in later life. Research has found that women’s pension pots are generally smaller than their male counterparts’. As they reach the age of 65, the average UK woman has around £35,700 in her retirement pot, whilst men have £142,000 saved for their golden years. The situation is challenging, there’s no denying it. But it’s not a lost cause. If you’re a woman, here are some nifty tips to help you take control of your finances and claim back your financial power.


Set financial goals
Before doing anything about your finances, it’s important to set yourself financial goals for the future. However, whilst having goals is essential, it’s not enough. You need to set goals that are right for you. How do you do this, you ask? First, make sure your goals are realistic and attainable. If you have £200 extra in your pocket a month and set a goal of saving £600 every month, it’s likely going to be a Herculean task to reach such target, and unless you make drastic changes to your lifestyle, you’re setting yourself up for failure. Your financial goals also need to be specific. Instead of saying “I’ll save more money”, say “I’ll save £100 extra per month.” That way, you’re giving yourself something to work toward and you’ll be able to track your progress easily. Another thing worth doing when setting financial goals is to give yourself a deadline so you’re less tempted to procrastinate. For instance, if you’re planning to buy a house, setting a deadline will help you plan better.


Create a financial plan
Once you’ve set your goals, make sure you create a plan of action. Start by making a note of all your monthly expenses, such bills, mortgage, and debt repayments, and have a look at how much is left after all your payments are taken – this is your ‘disposable income’. Calculate how much you approximately spend every month on food and other personal purchases. This will help you see where you’re spending too much and where you could make cut backs and save a little more money. But don’t stop there, you’re just getting started. Consider creating a budget you can stick to and try to track your spending so you can keep control over your finances and make the right adjustments. But don’t be too strict with yourself and treat yourself once in a while.


Build an emergency fund
Now that you have a financial plan, it’s a good idea to build an emergency fund to cover any unexpected expenses. If your car stops working out of the blue, it helps to know that you have money squirrelled away to fix it and cover the unplanned cost. Experts often recommend to have at least 3 months’ of living costs tucked away in a saving accounts. If you don’t have anything saved, now could be a great time to start. If you can’t afford to save large lump sums, that’s fine. Putting small amounts every month could help you build a decent pot of cash. And if you think you may forget and miss a payment, just automate the process by setting up a standing order or Direct Debit. This will help you build your emergency fund without you realising it.


Consider investing your money
Saving money is a sensible thing to do, but it may not always be the most suitable option when it comes to building wealth over the long-term as the value of your savings could be affected by inflation. We talk about inflation when the cost of goods and services rise over time. Things get more expensive and if your income doesn’t grow as fast as inflation, you’ll be losing some purchasing power. In other words, with the same amount of money, you won’t be able to buy as many things. But what does it have to do with savings, you ask? Well, when you save money, you typically earn a little bit of interest, but if the rate paid by your bank falls below the rate of inflation, the value of your savings will automatically drop. And if you were to withdraw your savings, you’d quickly realise that your money can’t buy as much as before. To see real growth, you want your money to grow at least at the same pace as everything else, and this where investing could help.

When you invest, your returns aren’t tied to a fixed interest rate - instead, they depend on the performance of your investments. So, with investing, there’s a risk you could get back less than initially invested. However, there’s also potential for inflation-beating returns in the long run. In fact, over the long-term, investing tends to perform better than cash savings. A study found that a stock kept for any 10-year period since 1899, has had a 91% chance of performing better than cash savings4.

Investing can seem daunting, but it doesn’t have to be. Nowadays, with robo-investing platforms, like Wealthify, it’s possible to dip your toe in the investment world with as little as you like and without any knowledge or experience. All you need to do is choose how much to invest and select the risk level that suits you. We’ll do the hard work for you, from picking your investments to managing your Plan on a regular basis. And if you want to do your bit for the environment, you could choose to invest ethically. With our Ethical Plans, you can put your money to work whilst supporting companies committed to driving positive change in society.


Consider using  your ISA allowance
As a UK resident, you have the possibility to save and invest tax-efficiently. In 1999, the UK government introduced ISAs to urge more people to put money aside. With ISAs, you can put your money to work and you won’t need to pay UK tax on any profits you make, meaning you’ll get to keep a larger portion of your pot. In total, there are four adult ISAs (Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs, and Lifetime ISAs), and every year, you can save or invest up to £20,000. One thing to keep in mind though is that you can only put up to £4,000 in a Lifetime ISA. You have until midnight on the 5th April to use your ISA allowance, otherwise you’ll lose it forever, so make sure you make the most of it.


1: https://www.bbc.co.uk/news/business-47822291

2: https://www.yourmoney.com/household-bills/a-third-of-women-couldnt-cope-financially-if-their-relationship-ended/

3: https://www.insuringwomensfutures.co.uk/wp-content/uploads/2018/01/Risks-in-Life-Report.pdf

4: Barclays Equity Gilt Study


The tax treatment depends on your individual circumstances and maybe subject to change in the future.


Please remember the value of your investments can go down as well as up, and you could get back less than invested.


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