7 critical financial considerations for women

Why women need to take their own financial planning seriously to protect themselves and their family

Financial Advice

For most busy women financial planning often comes low on a very long ‘to do’ list. However, with more women working and their income being just as important as their partners, there are some important aspects to consider:

• How would the children be looked after if I were seriously injured or died?

• What would happen if I were suddenly unable to work and bring in my income?

• What future plans could not be fulfilled if my income stopped?

Life Insurance: It is usual, even today, that a woman is responsible for the majority of the child care, the shopping, washing, taxiing to and from school and clubs etc. To employ someone for each of these services and pay them the going rate would be astronomical, but many women fail to insure themselves.

What about illness? Few employers provide any form of sickness protection meaning there is only Statutory Sick Pay (SSP) the standard rate currently being £88.45 per week. Short term it may be possible to muddle through but long term something would have to give.

Future Finance Plans: We all have future financial plans – the holiday we want, the car we are going to buy, when we can afford to retire – these are based on an assumption that we will continue to earn. If the money stops then these future financial plans can no longer be achieved. So insuring for an ongoing income is vital.

Pension: Traditionally women have neglected their pension arrangements. With the increase in divorce and women deciding to remain single the need to provide for their own retirement is essential.

Retirement: In retirement everyone has their own individual personal allowance so even if a woman retires with a significant other, it makes sense for both to have an income that uses the tax free and basic rate tax allowances. And women with their own businesses would be wise to consider using a pension to safeguard profits, thereby reducing their tax bills.

Investment & Inheritance: Women tend to be more cautious and can shy away from investments. Cash alone will not keep up with inflation, so adding other asset sectors, such as Equities and Property funds, will offer greater potential for real growth over the medium to long term. With the right advice a well-constructed portfolio can be achieved with an appropriate level of risk for anyone to feel comfortable.

After hard work and sensible investing, women in particular want to help their family and eventually give as much as possible to the next generation. Unfortunately, there is a limit on what can be passed on before beneficiaries have to pay inheritance tax. With the current ‘nil rate’ limit being £325,000, and anything above this being taxed at 40%, doing so is not so easy. By looking at financial affairs early it is possible to save inheritance tax and ensure that your family reap the benefits from assets that have taken a lifetime of hard work to accumulate.

Gender Pay Gap: Some women are still paid less than men for the same work, even though this is illegal, the current overall gap for full time workers is 13.9%. Women have to start questioning their employers if they have male colleagues doing the same job, to ensure that they are not being treated unfairly. Bringing this issue to the forefront is the only way that things will change.

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