Be Financially Aware
Many of us ladies have a real problem with keeping tabs on our finances, and the situation gets worse when we’re in relationships. Surprisingly, according to UBS:
“Millennial women are more likely to leave investment decisions to their husbands (61% vs 54% of older generations)”.
Hey, I am not here to make anybody feel guilty or bad about themselves. We can all think of reasons why that might be the case: busy lives, a disproportionate share of the parenting responsibilities falling to mothers, or more prosaically, money talk considered boring and not sexy.
And, your partner’s focus on the finances is usually pretty handy and well-meaning. After all, it frees up some of your time.
But, being financially aware is so very empowering!
No matter if you’re the bread-winner or a stay-at-home mum, this is important, not just for you, but also for your loved ones.
It takes time, time to gather your financial data first, and then to analyse it in light of your life situation and events (new baby, wedding, house purchase). But, it’s an investment into you and your family’s future. It gives you the confidence and the knowledge needed to make choices and decisions that can have a lasting effect. You can better protect your family against what life might bring. You can envisage the future more serenely.
So, what do I mean by being financially aware?
Basically, it’s:
- Establishing what your current financial situation is,
- Managing your finances with specific target, goals and objectives,
- And gaining some knowledge on financial products (mortgage, life insurance, etc.)
Imagine that you’re the CFO of your life. First, you need to look at the financial statements:
- Balance sheet
- Income statement
- Outgoings statement
And then, you can start planning. You determine your goals and objectives, your projects and you set priorities. You try to assess your risk appetite and tolerance. Finally, you try to come up with a financial plan! This can include going back to work if you’re a stay-at-home mum.
Also, you might want to seek the help of a financial planner. If you’re not sure whether that would make sense for you, you can have an often free initial consultation.
Data gathering:
But first things first, gather data! You should have access to this data. If you don’t, or you don’t know how to access it, then your first task is to start calling the banks, pension fund providers, insurance companies etc. to help you gain access to this information. Most of this data is available online, though I hear some pension funds are still not online (shocking!).
1- What is your current financial situation?
Basically, this is your personal Balance sheet. It’s the picture of your finances:
- What are your assets? Pension, savings, current account, property, shares and stocks, other assets
- What are your liabilities? credit card debt, personal loans, mortgages…
- What’s your tax status? Basic rate, higher rare or additional rate tax, or non-tax payer.
2- What are your current income and outgoings?
Once you got the picture of your financial situation, you need to look at the ebbs and flows of your finances:
- Your Income statement: Earned income (from employment or self-employment, pensions), state benefits, spousal maintenance, interest and dividend income, rental income…
- Your Outgoings statement: rent or mortgage payments, food, heating, electricity, council tax, taxes, TV License, Gym membership, car running costs, credit card and loan payments, insurance premiums, spousal maintenance…
3- What about your Expected income and outgoings?
This is income and outgoings that should materialize in the foreseeable future. Think school fees for example.
What next?
Now that you have collected the data, you should start seeing how you’re doing financially. Maybe you’re spending more than you’re earning or actually you can afford to up your pension contribution or to buy that house with garden with your partner. Whatever your goals are, now you can properly revisit them with the confidence that you know where you’re at.
Finally bear in mind that the initial data gathering exercise is the hardest. Subsequently, it becomes much easier to update the numbers.
Ladies, this is the first step towards a healthier you! Set some time aside for your financial health and you and your family will reap the benefits later. Good luck!
A few good websites:
https://www.moneyadviceservice.org.uk/en
Has loads of advice, and you can actually call in to get free and impartial advice. There are (a lot of) calculators, budgeting tools and debt advice. They actually also help people tackle problem debt.
This is part of the UK Financial Capability Strategy. Not quite enough, but gotta start somewhere.
https://www.pensionsadvisoryservice.org.uk/
Sister website to the Money Advice Service, with a focus on pensions. They provide independent and impartial information and guidance about pensions, for FREE.
https://www.citizensadvice.org.uk/debt-and-money/
Citizen’s Advice is a great place to get free confidential advice on a range of problems.
https://www.gov.uk/check-state-pension
Gov.uk has a wealth of information on financial matters. You can check your National Insurance contributions, and potentially contribute for past years where you didn’t contribute.
