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Five questions to ask yourself to supercharge your financial wellness

financial wellbeing check
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Financial knowledge goes together with empowerment. But the latest report Financial Wellbeing and Women: Time to Level Up, by wealth management firm Saunderson House, reveals marked differences in the ways and attitudes in which men and women approach this life skill. The report’s findings were based on survey responses from nearly 300 professional women, including members of the everywomanNetwork, and showed that financial empowerment is still a work in progress for many.

 

So, how can you fast-track your financial resilience and wellbeing? Start by asking yourself these five questions — guaranteed to reveal where your knowledge gap is and how you can supercharge your finances in the short and longer-term. 

 

1. What are my financial goals?

Financial savvy is no longer just about successful wealth accumulation; it involves a more holistic perspective on how we can maximise and protect our assets and use our money better — an outlook that has been accelerated by the pandemic. Knowing your financial goals is the first step on an empowering journey to financial wellnessKirsten Pettigrew, Saunderson House Chartered Financial Planner, and author of the Financial Wellbeing report says: 

A financial goal can be short- or long-term, but setting objectives can move personal finance from being a passive subject to one of proactivity — offering a feeling of accomplishment when goals are met. If you do not know your goals then you cannot congratulate yourself when you achieve them. 

She recommends starting with short-term goals that you can check off, to help you form the habit of achieving financial goals, and then moving on to medium- and long-term ones. To do this it’s essential to assess your current financial situation, looking at the assets and liabilities you currently have and whether you understand what each of these pots are and how they will help or hinder you in the future. Understanding your financial priorities and what the non-negotiables are, is vital in setting your goals too. And finally, being honest with yourself around what you spend, so you can understand your expenditure and outgoing balance. ‘This is vitally important when it comes to something like retirement planning, as how much you spend will form the basis of how much you need to save for retirement,’ notes Kirsten.

 

2. How good is my financial literacy?

Taking control of your finances means having the confidence and knowledge to understand what to do and why. So, why don’t more women feel that they have the financial literacy to make decisions?

‘Often words like ‘boring’, ‘complex’ or ‘timely’ spring to mind when it comes to personal finance, which I think is the leading deterrent to people taking control of their own financial literacy,’ says Associate Director, Yemisi Duroshola. ‘There's so much jargon and so much of it is done for us, for example your pension being sorted out by your employer, that it’s easy not to take control or really understand the financial landscape,’ adds Kirsten. Financial literacy is about taking control and ownership of your finances and ascertaining how they're going to help you in the future. For her, the first step is to be honest about whether you understand the financial products you currently have, and if you don’t, ask yourself why not?

‘Financial professionals have a duty to explain what they are selling and it’s important to find the confidence to ask questions.’ She also suggests stress-testing your understanding around the relationship between risk and reward, as well as asset classes and the basics of investing. If you find your knowledge lacking in any area, there are plenty of resources online to provide bitesize information and top up easily. And if it all seems too overwhelming, again, a financial advisor can cut through the noise and answer any questions to help improve your fluency in your personal finance.

 

3. How able do I feel to achieve my financial priorities?

The report by Saunderson House shows that while women appreciate the importance of financial security, their own perception of their ability to achieve financial goals is one of the key blocks to greater financial wellbeing. This can be due to feeling unprepared or under-researched due to lack of time, a general lack of clarity on what is possible and being more attuned to risk, creating an ‘importance vs ability’ gap.

‘Financial priorities are very fluid and not linear, which makes planning for them complex and at times stressful,’ notes Chartered Financial Planner, Leanne Wong. However, despite this friction, women do appear to be taking more action to increase their resilience, with a third of those surveyed intending to make changes to financial plans and investments as a result of the pandemic, compared to just six percent of men. However, overwhelm can work against women in this regard.

‘Men are often better at looking at individual goals, whereas women tend to see things from a more holistic viewpoint, with the knock-on effect that if you’re not necessarily achieving one goal it can stop you from achieving another,’ adds Kirsten. Statistically too, she notes, women are more risk averse, but suggests that some of that may be down to a lack of financial education and mitigated by education. ‘It's about understanding the risk that you're taking and feeling more comfortable with it, which you start to do when you really understand what's going on,’ she says.

 

4. Do I need a financial advisor?

A good financial advisor can be a powerful way to mitigate the ‘importance vs ability’ gap and they will be able to tell you if they can add value to your circumstances and financial plan, and identify any gaps in your strategy or portfolio. Leveraging their expertise can also be a key factor in improving financial wellbeing for busy professional women — the report found that having the time to pay attention to finances was a crucial element for those surveyed. Wealth management has traditionally been perceived as being ‘for the wealthy’, but this perspective has changed significantly and no matter how modest your means, a financial advisor can help you maximise your position and build on it.

Over a quarter of women say that having a financial advisor who is a similar age to them is desirable and a female financial advisor may well be able to offer extra attunement around gender issues, such as around the ‘pension gap’ caused by maternity leave, and spot places to shore up your financial situation. The key thing is that your financial advisor is someone who makes it all feel easier and clearer, helping your finances to become more effective. ‘Ultimately, a financial advisor should be someone you can trust, someone who understands what you want to do and who you feel is on your team to help you materialise your financial future,’ says Kirsten.

 

5. What do I need to know to invest more responsibly?

More than half of the women surveyed said they felt a responsibility to use their wealth in a responsible way, helping to improve the environment and society. However, the report shows a marked difference between the genders in this regard, with women’s greater appetite running alongside a feeling that they are less able to achieve this aim — only 19 percent of women regard themselves as knowledgeable about how to start the process of sustainable investing.

‘Understanding what ‘investing responsibly’ means to you is important,’ says Emma Bennie, CFA Head of Discretionary. ‘An advisor can help here by clearly explaining the different approaches to responsible investing and how you can incorporate this within your portfolio.’

Areas to consider when investing responsibly include ESG integrated funds, or funds with a sustainable approach, thematic funds focused on a specific theme or sector and impact funds that target a positive impact on the environment or society. ‘

Responsible investing is available to the wider market, and most financial institutions will now offer a responsible option,’ says Kirsten. ‘However, there's a lot of ‘greenwashing’ around.’ She recommends doing your research carefully, paying attention to the metrics of ESG and sustainability, or again consulting a financial advisor to help you sift through products to ensure you make the impact you want to with your finances.

 

Read the latest version of Saunderson House’s Financial Wellbeing report.

Learn more about financial awareness with Rathbones financial awareness course