Experts from The WealthiHer Network explain why you should dust off your finances at least once a year – and offer some handy tips
We should look to spring clean our finances at least once a year, just like we give those dusty cupboard tops and dirty kitchen kickboards an annual deep clean. That’s according to financial experts from The WealthiHer Network www.wealthihernetwork.co.uk. But whilst donning a pair of rubber gloves and delving to the back of the messiest of cupboards might not be the most appealing of tasks, it seems getting to grips with our finances is even further down the list of desirable pursuits for many of us.
And that is particularly true of women, who have not only been hit hardest financially by the current pandemic, but who continue to struggle more than their male counterparts when it comes to the world of money. This is evident in the findings of The WealthiHer Network’s ‘The Changing Faces of Women’s Wealth’ report 2020/21 which reveals that:
- Nearly two thirds of women identify with the statement that they are not financially savvy
- 75% of women struggle with self-esteem when it comes to finance
- 62% of women feel financially insecure
- Covid-19 has disproportionately impacted women, with 62% saying financial plans have been affected, including retirement plans
- A third of women still think the finance industry is a man’s world
- This despite the fact a third of the world’s wealth is currently held by women
“Women have experienced a particularly tough 12 months financially as a direct result of the pandemic. But now more than ever, putting off making financial decisions should never be an option,” says Tamara Gillan, CEO of The WealthiHer Network which champions female empowerment when it comes to the world of finance. “It may seem scary but the best way to tackle personal finance decisions is to approach it in bite size chunks and know who to turn to for advice; whether it’s family, friends or a professional.”
The WealthiHer Network has tapped into the expertise of its partners from the world of finance and asked them to pull together some top tips on how to ‘spring clean your finances’; where to start, what to think about and when, and why it is important to do so.
Emma Rowles Nicholson, wealth advisor at wealth manager Brewin Dolphin explains: “As we step into spring it can be a good time to reconsider your financial goals – what you would like to achieve over the short, medium and long-term. Distinguishing your goals can help you to allocate your money towards these in the best way.
“A consultation with a professional financial planner can help you to build a comprehensive plan to achieve your life goals, providing objective, clear advice which adapts to whatever is going on in your life or the economy. This could include boosting your pension, maximising tax allowances, managing expenditure, taking out financial protection and making a will.”
Her advice is mirrored by Emily Stevens, senior partner at Corinthian Wealth Management, who adds: “Set some money goals or revisit existing ones to see if they still make sense and are in line with what you want to achieve. Much like life goals, you really need some money goals to help bring to life the things that matter, whether that’s shorter-term things like saving an emergency fund or buying a house, or longer-term things like living out your dream retirement and using your money for a force for good.”
Areas of financial planning on your basic housekeeping ‘check list’ could include:
- Pension or ISA contributions making the most of personal allowances
- Tax allowances for married couples and civil partners
- Housing needs now and in the future
- Pregnancy and its financial impact
- Wills regularly reviewed to ensure they reflect your personal circumstances
- Protection policies such as life insurance, critical illness, income protection and payment protection
- Retirement planning and estate planning
- Death & Divorce arrangements
- Contingency planning in the event of ‘unknowns’
Nick Richie, director of wealth planning at RBC Wealth Management International has these top tips:
- Know your budget
A sound financial plan starts with knowing what comes in and what goes out of your bank account each month. It sounds simple, but without this foundation it’s difficult to set realistic financial goals. Thankfully there a number of online tools and open banking mobile apps that let you connect your accounts in one place and keep track of all your spending. Your savings might have been bolstered in lockdown or you might be spending more than you think!
- Develop a personal and financial timeline
Think about your personal priorities, both immediate and longer term. Maybe you plan to get promoted, set up a new business, start a family or buy a second home. Many of our personal priorities have financial implications and being clear on what’s important to you personally will help you align your financial plans to these priorities.
- Allocate savings to short, medium and long term goals
With a plan in place, allocate savings to short, medium and longer term goals. These timeframes can then help you determine how much risk you should take with your savings. You might not want to take risk with savings you expect to need in the short term whereas funds set aside for the long term like a pension should usually be invested to achieve better long term returns.
- Make the most of available tax allowances
There are a number of vehicles available to UK savers that can reduce or remove the impact of tax on the hard earned return on savings. From ISAs to pensions, determining which are most appropriate for you will depend on a number of factors. A financial adviser can help you make the most of allowances available to you if you’re unsure.
- Protect what matters most
Covid-19 has sadly taught us nothing is certain. Protect loved ones by ensuring your wills are up to date and you have adequate life insurance in place to pay down debts and provide for your family. Also, make sure you are up to date with any recent changes announced by the Chancellor in the Budget (3rd March 2021). Make sure you understand the implications changes to personal taxation could have on you and your family and adapt your financial plan accordingly.
Concludes Tamara Gillan from the WealthiHer Network: “Carrying out a ‘spring clean’ may raise issues that need to be addressed, but in the long-term gives peace of mind that personal finances are being managed effectively. I see our job at the WealthiHer Network as helping women to become more empowered when it comes to financial decision-making, breaking down taboos and barriers that needlessly exist around women and finance and giving them the confidence to believe the world of finance is there to support them as much as, or even more than, men.”