Why women should take control of their finances

Today is International Women’s Day, a day which celebrates the social, economic, cultural and political achievements of women from around the world. It is also an opportunity to look into the gender investing gap and what can be done to help encourage women to invest more and take control of their finances.

Statistics show that women usually take control of the day-to-day spending of a household as well as short term savings needs [1] whilst their male partners are more likely to take control of the longer-term financial responsibilities such as life insurance, pensions, investments and mortgage decisions.

Whilst women are now taking more of the financial roles within the family there is still a divide between the short-term finances and the longer-term finance roles within couples in the UK.

The benefit of taking control of your own finances

There are so many advantages to women taking control of their finances, or at least to taking a more active role in their long-term financial planning goals. From financial independence to bigger pension pots to increased happiness, there is no reason not to.

Bigger pension and investment pots

Recent statistics show that generally women live longer than men [2]. Women also tend to have significantly smaller pension and investment pots [3], even though they usually outlive their male counterparts and will need to provide for themselves for longer.

Women’s pensions and investments are smaller due to a multitude of reasons - from the gender pay gap to taking time away from employment to have families and raise children or to look after sick relatives - all adding to the ever-widening gender investment gap.

With more couples than ever divorcing, women also cannot rely on their partners income or pension in the event of their partners death - and ultimately, a state pension is for most people not on its own enough to live on.

How can this be combatted?

Small changes make big results – by adding as little as 1% extra of our earnings on top of the pension auto-enrolment minimums at an early stage of our careers, our pensions could be boosted by around as much as £15,428 over 39 years [4].

Starting investment and pension conversations and saving early is another way to ensure you have enough money in retirement. By starting early, you have more time for growth to happen, giving you the benefit of compounded returns over a longer period and also, the ability to weather the storm of market volatility over a longer period of time.

Why is it important to encourage women to invest more?

Failing to invest money is risky in itself. With rock bottom interest rates offering little to no growth, even money in bank accounts is at high risk of being outpaced by inflation. Regardless of gender, money in bank accounts risks losing value in real terms. Of course, you should always keep sufficient emergency funds in cash; however, anything over and above the needs of an emergency fund risks losing you money. We work so hard for the money we have, surely it is better housed in an investment that can provide some return? Not only can investing help provide greater returns than cash [5]* but it can also give people greater financial independence and an understanding of how investing works.

Financial independence is so important, both for now and for the future. Financial independence brings greater autonomy and self-reliance, rather than reliance on another.

Do women and men require different advice?

Ultimately, it should be said that financial advice is not gender specific and it should never be perceived as such. Instead, financial advice should be person specific. Each individual and family unit has different needs, aims and goals and each should take the opportunity to work with a qualified financial adviser to get bespoke advice for their financial future.

However, women are statistically less likely to invest and therefore we should be encouraging the women in our lives to take control of their finances and start investing now.

By encouraging women to invest, we will not only close the gender investing gap but more importantly we will be promoting a culture of education and independence for all investors in the future.

Top Tips for taking control of your financial future:

1) Start early if you can, however it is never too later to start. The earlier you start thinking and investing in your financial future, the longer your money has to grow and the sooner you are taking steps towards financial independence.

2) Get involved. Get involved with your family finances, whether this is speaking to your partner about finances in general or starting to take more of an active role in your pensions and investments. The more you get involved the easier it will become.

3) Don’t be afraid to ask for help, from family or friends

4) Speak to a qualified financial adviser who can help you and your family reach your financial and retirement goals.

To take control over your finances and start planning for your future, speak to a Kellands adviser today. We are here to help.

Article written by Gemma Underwood, Financial Consultant at Kellands (Gloucester) Limited.

*Past performance is no guarantee of future results.

[1] https://www.royallondon.com/media/press-releases/press-releases-2020/january2/how-men-and-women-divide-the-household-money-chores-revealed---royal-london-research/

[2] With women now generally living longer than men, In 2017 to 2019, life expectancy at birth in the UK was 79.4 years for males and 83.1 years for females https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/lifeexpectancies/bulletins/nationallifetablesunitedkingdom/2017to2019


[4] Fidelity International, The Financial Power of Women Report, 2018, Statistics by Fidelity

[5] https://www.hl.co.uk/news/articles/the-value-of-investing-versus-cash

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