According to studies, the husband takes many of the major financial decisions faced by couples. This potential over reliance on one party can undoubtedly have repercussions, particularly in the case of divorce or the loss of a partner.
Research from The WealthiHer Network Report 2019 predicts that by 2025 over 60% of UK wealth will be in the hands of women, yet it also shows that 70% of women are not engaging with finance.
The gender pay gap is well publicised, but there are also other areas to consider.
The ‘Motherhood Penalty’ shows that working mothers earn 20% less than fathers ten years after the birth of their first child (Social Market Foundation Research), and very few new parents opt to take shared parental leave.
It is little wonder that many parents don’t choose to work part-time with the cost of childcare. This all leads onto the ‘Childcare Penalty’ with the Office for National Statistics (ONS) showing that in couples, 65% of mothers are in work compared with 93% of fathers.
And if that wasn’t enough, there is also the ‘Good Daughter Penalty’ with many of the informal caring roles taken on in families being done by women.
Women tend to be more cautious when investing and less willing to take risks with their finances. This coupled with women often earning a lower salary means we often end up with less in the pot!
If we then sit on this pot and keep it in cash, it isn’t working as hard as it should be or needs to be.
Given that women overall tend to live longer, this is particularly important to grow our assets when it comes to pensions, that is, if you don’t want to have to survive retirement on the state pension of £196.14.
Do you have a financial plan?
I am aware that this blog has sounded somewhat negative so far, but there is a way out of this, which is to start taking control of your finances.
Taking control of your finances can be achieved by doing your research and increasing your financial knowledge, improving your financial wellbeing, or working with a financial planner.
A financial planner can help you put strategies in place and develop a financial plan that will be beneficial in the long term and help you make the most of your assets.
Working with a financial planner might be particularly important at times such as divorce or bereavement when you have to rethink where you are and what you have financially.
A planner will also work with you on an ongoing basis because, as we know, life doesn’t stand still, and we need to be flexible in responding to unexpected events. The recent pandemic has undoubtedly highlighted this.
Once the plan is in place
We can then think about investing and how this might help you. If you do receive a lump sum, it is essential to consider what to do with this, particularly regarding what it is needed for and the time frames involved.
With interest rates at historically low levels, it might not be prudent to deposit a lump sum of cash because it might not keep pace with inflation, so the value of your money will fall in real terms.
By way of an example, if you have £100 and leave it in a low-interest bank account for ten years, the rate of inflation will likely outpace that of your account’s interest, resulting in you not being able to buy as much in ten years with that money as you could have done today.
A planner can help you work out how best to approach investing your money, and together we can come up with a solution that suits your circumstances, time frame and potential income needs.
This process will ease the pressure of making your own decisions, allowing you to get on with your life.