Financial Planning Tips for Women

We like to think we are becoming a more equal society, but women continue to face a particular set of challenges, compared to men, when it comes to managing their income and planning for the future. I think things are certainly beginning to move in the right direction and I’m happy to say that males are well out-numbered in our company with 4 out of our 6 staff being female. Generally speaking, women face different challenges through their financial life journey, compared to men, including some of the following.

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The Gender Pay Gap

The gender pay gap - the differential between the average pay of males and females within an organisation - is estimated at an average of 14% in Ireland (Eurostat). This means that the average woman, even those in leadership positions, will be earning less than male counterparts in a similar role.

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Maternity Leave and the Need for Flexible Working Conditions

Compared to men, women?are more likely to leave the workforce for extended periods of time, or reduce their working hours or stop working completely, particularly those with young children. These gaps can often make it harder for women to progress in their careers as well as leave them with a reduced income.

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Longer Life Expectancy

According to the Central Statistics Office, women’s life expectancy at birth is 82.8 years, versus 78.4 years for men (Life tables 2010-2012). Women?also?often tend to retire?earlier?than?their male counterparts. This, coupled with?gaps in employment and the gender pay gap, means it is common for women to enter?retirement with less saved?than?men of a similar age.

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A Different Attitude to Risk

While generalising an entire gender’s approach to investment is tricky territory, it is safe to say that most women show preferences that differ from those seen in male investors. Women are more conservative long-term investors than men. Their primary goals revolve around keeping money safe and saving for long term goals, primarily retirement. Risk aversion may be causing many women to miss out on greater long-term returns from their investments. For example, paying off your mortgage with spare cash savings may not be the correct thing to do, especially if your interest rate is c. €2% or lower, when you could have compounded 4% returns annually until the end of the mortgage term.

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So, how can women navigate these challenges and secure their financial future?

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1.??????Be involved with your Finances. The more intimately you know your own finances the better. This is particularly important where you share finances with someone. It is important that you can be financially independent just in case something goes wrong – divorce, premature death, etc.

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2.??????Set Financial Objectives and Goals. Before doing anything about your finances, it’s important to set yourself financial goals for the future. Whether it is travel, paying off the mortgage, funding children’s education or the level of income you wish to enjoy in retirement, these goals must be particular to you. The goals should be specific and realistic.

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3.??????Understand your Financial and Personal information. Understanding your current financial situation, including income and expenditure, assets and liabilities, risk attitude, tolerance and capacity all improve your understanding of your financial circumstances and pinpoint areas of strength and weakness.

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4.??????Create a Financial Plan. Once you have set your objectives and goals, and understand your current financial position, make sure you work with a financial planning professional to create a plan of action. Those with a written, comprehensive plan are more likely to feel strongly confident about achieving their life goals. Financial planning is a dynamic ongoing process that requires continuous monitoring.

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When our staff engage with our female clients, we put a large emphasis on education to give them greater confidence & control of their own financial future. Planning eliminates nasty surprises and shocks to your financial health and it’s never too late to start.?