Women need more financial knowledge than men. We live longer and therefore need to provide for ourselves for longer, while, statistically, we earn less money than men over an average lifetime.
We learn from recent surveys that women spend much less time on their financial affairs then men do. Why is that? I think many women lack confidence when it comes to money. The world of finance is so filled with jargon that it’s certainly very easy to become intimidated.
New research published by Prudential shows that while most of us focus on improving our health after hitting 40, a worrying 58 per cent of over 40s admit to rarely or never looking at their retirement savings and plans for the future.
I waltzed through my 40s on an interest-only mortgage, gambled the family’s whole future by borrowing over a million pounds to buy a business, and spent almost ten years erroneously thinking I had enough pension provision.
Mrs Moneypenny says uncoupling cash from emotion is the key to mastering finances as currently more than 58 per cent of people don’t regularly consider their plan for the future
I came to my senses when I finally worked out that the state pension was never going to cover the visits to the beauty salon that I want to continue well into my 80s.
Plus, although I am still (after 28 years) married to the long-suffering Mr M, I have always been brought up to believe that ‘a man is not a financial plan’.
Then there are my three children, two of whom are still in education. So that’s why at 55, and, despite having written a best-selling book on finance, I still have some way to go before I hit my own money goals.
Fundamentally, money facilitates fun — I’ve used mine to learn to fly when I was 46, for instance. I like to travel, to eat good food, to be able to afford sheets with a high thread count. So I learnt to be financially literate myself.
The key is to uncouple cash from emotion. Recently when I got a new job in Scotland, I decided not to sell the family home in Oxfordshire or buy a second home in Scotland — the extra stamp duty would have cost me a whopping 13 per cent. So, I’m living in a rented basement flat because it makes financial sense.
In sharing how I master my own finances, I hope to help you see how you can make money work, too. Money is inextricably linked to bigger, sexier issues: confidence, family, fun and freedom.
Put any spare energy now into getting to know the details of your own finances. The more you know, the more in control of them you will be.
INVEST YOUR TIME
whatever your age, the steps which stand between you and mastery of your financial future are not many. But they require the investment of time. The thief of money is time. If you are short of time you are more likely to accept that car insurance quote rather than going online for a better deal.
Nothing feels as good as the knowledge that you have your financial goals established and under way says Mrs Moneypenny
Almost everyone I came across during filming of SuperScrimpers, the show I presented for three years on Channel 4, was able to improve their finances by investing more time.
Invest the time, and I promise it will be an investment that will reap the greatest reward — peace of mind. Nothing feels as good as the knowledge that you have your financial goals established and under way.
And remember, as the late Helen Gurley Brown, long-time editor of Cosmopolitan magazine, once said: ‘Money, if it does not bring you happiness, will at least help you be miserable in comfort.’
CALL TO ACTION
Buy a notebook and note what you spend money on. Mortgage/rent, utilities, council tax, internet access, car insurance, mobile phone — start a new page for every item.
Then resolve to spend an hour a week reviewing each section and working out how to spend less and save more.
An hour a week might sound a lot, but when you compare it to how much time you might spend worrying about money, it is no time at all.You will have often heard that ‘if you look after the pennies the pounds will look after themselves’.
She recommends saving anywhere possible, with annual credit rating checks crucial for ensuring that you avoid paying more for credit than needed
I would argue the other way — if you look after the pounds, you will have some spare pennies for treats. Instead of giving up that expensive take-out coffee every day (yes, I know this could save you £600 a year, but think how much you enjoy it) how about renegotiating your TV/internet contract? Or your mobile phone contract. Or even your mortgage or car insurance.
That’s why you need an hour a week to work through your list — go ahead and put it in the diary.
You will be amazed at how much money you can save when you put your mind to it.
IN YOUR 40s
Contribute to your pension more than you currently do. Does your employer offer incentives? For example, will they match your pension contributions?
This is an age when everything is at its most expensive, with children and a mortgage, for instance, and therefore the temptation not to save is strong.
Putting money in your pension in your 40s is essentially a 15-year savings plan, and you are making payments out of your gross salary, not your net pay. You get tax relief on contributions. This is free money!
Check your credit rating; do this annually and make sure that there are no errors. Try using noddle.co.uk, which is free. Or experian.co.uk, where it costs £2 to order a copy of your statutory credit report. If companies are holding wrong details, or even partial information, then you will be paying more for credit than you need to.
Mrs Moneypenny says in your 70s it’s important to consider downsizing your home or renting a room out as HMRC allows you to rent out a room in your house for up to £7,500-a-year without paying tax
If you possibly can, overpay your mortgage each month. Even doing this by a small amount will save you a lot more interest than you will earn on your savings.
Are you saving into an Isa? At 45 you are likely to be working for at least 20 more years so putting £100 away a month for 20 years, assuming a five per cent return, will give you £35,000 to supplement your pension.
IN YOUR 50s
Do YOU have an interest-only mortgage? When I turned 50 in 2012, I took myself off to a detox clinic in Austria, and after getting through the pain of giving up caffeine, I woke up one day full of energy and listed all the things in my life that I wished I could sort out.
Top of the list came my mortgage. I had bought my house in 2008 with an interest-only loan and, four years later, I still had the same mortgage arrangements. If you are in your 50s and have an interest-only home-loan, convert to repayment now.
Do you know where all your pension funds are? If you have worked for a few employers during your career you may have lost track of some. You can easily track them all down at gov.uk/find-pension-contact- details.
Knowledge is power. What pension can you expect when you retire? Will it be enough? You may need a financial advisor to help you.
Have you got the best deal on all your insurance types, and do you even need all of them now? Go through them all one by one (car, private health, pet, house contents and so on) and check to see if you can find any of them for less money.
Or you could find an insurance broker and get them to do it for you instead.
IN YOUR 60s
This is the age when you might be thinking about retiring, but the Government certainly has other plans.
A report from the Institute for Fiscal Studies published this month shows what has happened since the retirement age for women was increased from 60 to 63, between 2010 and 2016. It showed that 1.1 million fewer women are receiving a state pension, saving the Government £4.2 billion, and most of them are still working.
However, this group is £32 less well off a week on average.
My suggestion is to retrain and get a job to supplement your pension, so that you don’t have to start drawing on it immediately. It is increasingly easy for people to retrain — you can get help with training costs and even living expenses, for instance, while you train to be a teacher.
This is especially true if you could teach maths or science. Or how about becoming a yoga teacher and taking a few classes a week to then pay for treats and holidays?
If you think you may have a dormant bank account somewhere, maybe one you opened years ago and then forgot about, you can track it down at mylostaccount.org.uk. You can find out what age you will be able to draw your state pension or get a free bus pass at gov.uk/state-pension-age.
IN YOUR 70s
Everyone flown the nest? Thought about renting out a room? My mother is doing this now at 89. HMRC allow you to rent out a room in your house for up to £7,500-a-year without paying tax.
Or downsize. It might be a wrench to think about leaving your home, but the money might be better spent buying somewhere to live in a housing complex designed for older people. You might be fit as a fiddle now, but in ten years that might not be the case — and how much better to organise it all before you have to.
Now is also the time to start thinking of giving money away. It might be nice to see something done with it rather than leaving the giving until after you are no longer around. There is a guide to giving tax effectively on the Money Advice website at moneyadviceservice.org.uk.
HEATHER MCGREGOR is a professor at Heriot-Watt University and is the author of Mrs Moneypenny’s Financial Advice for Independent Women.