Ten things financial advisors wish all women knew about their personal finances

Financial wellbeing

As financial consultants for Morrinson Wealth, Vas Babieu and Jo Dean know how important a strong financial strategy is as a foundation for a successful life. Here, they let us in on ten things they wish all women knew about their personal finances in order to take control and maximise their position.


1. Financial advice is for everyone

‘We all have the right to explore our options and see if we can improve our financial position,’ says Jo. ‘I meet so many individuals who wonder if financial advice is really for them. My advice is don't be scared to speak to an expert about your own financial wellbeing and get rid of that insecurity. You must never be embarrassed about trying to educate yourself and working to find out what you could be doing, to put yourself in a better financial situation. And quite often, it's just about restructuring what you already have.’


2. Financial education is important

‘Money is foundational, and managing it better basically means you’re managing your whole life better,’ says Vas. ‘It’s so important for women to become financially educated because it is empowering, you ‘don't know what you don’t know’ so without additional guidance then you don't have full control over your finances. The most important aspect though, is the way we feel about ourselves — the question to ask when taking financial actions is “Am I more empowered or disempowered?” That psychology can have a bigger impact on other areas of our lives too. When we feel disempowered about our capacity to make decisions, it might then stop us taking that next project, or going for that new challenge in life.’


3. Financial health is a holistic thing

‘Traditionally, we associate wealth management with our net worth, but it is so much more than that. A good adviser will take a holistic approach to your finances and look at your overall financial wellbeing,’ says Jo. ‘Personal finances are not just about building capital, but about preserving and safeguarding assets in the right way, from legacy planning to protection, debt management or mortgages. In wealth management, there are three key objectives: building savings, cash management and protection — and there is always a change you could be looking at within those areas to positively impact your financial situation.’


4. Risk shouldn’t stop you investing

‘In behavioural economics,  short-term losses and market volatility  can keep female investors on the side-lines, as they tend to be more risk averse,’ says Jo. ‘If that is the case for you, the best way to proceed with  investing is to have a drip feed approach, meaning you will benefit from ‘pound cost averaging’. Effectively, this means that instead of investing big lump sums, you develop regular saving habits by putting away a little bit each month. That averages out returns and somewhat protects you against potential drops in the market.’


5. You need to think about the future now

‘Often, we can be quite short-sighted and just look at what we need to do right now, especially with a young family,’ says Jo. ‘It's tempting to ‘put the future off’, but it is really important to always be thinking ahead and to build in a medium and longer-term approach to things, sooner rather than later. Taking a longer-term approach to financial management can help overcome risk adversity, which women can have a tendency to lean toward, as well as taking the emotion out of investing.’


6. You’ve got to know where you want to go

‘When I'm talking to prospects, my first meeting always starts with me asking them what their goals and objectives are. That's what I really want to understand,’ says Jo. ‘It could be that they’ve got children and it’s more important than anything else for them to be able to give them a kick-start in life. Or, they might be thinking about legacy planning - here, some people want to spend everything they have and others want to pass on their assets to their family in the most efficient way possible. The first step is to be clear on what really matters to you and then to speak to an advisor to get the best advice — and there's no charge for speaking to us until you become a client, so it really is a case of nothing ventured, nothing gained.’


7. Using allowances makes a big difference

‘In the UK, we have multiple  allowances when it comes to investing and these can really help us save towards our short, medium and long-term goals as well as improve tax efficiency,’ says Jo. ‘Everyone's situation is different, so it’s important to get a clear understanding of what allowances you have available, either through research or talking to a finance professional. For example, pensions are the most tax efficient way to save for retirement — and that’s because you get full tax relief from any contributions that you make.’


8. It's never too late to start a pension

‘The average life expectancy of a female in the UK is 84 years and a 25-year-old woman now has a 12.1% chance of living to 100. We're living longer, and therefore we need to make sure that we're adequately prepared for retirement,’ says Jo. ‘Ask yourself how much you will realistically need in retirement, and then devise clear strategies to start to gain control of your retirement plan.’ Vas agrees: ‘Obviously, the best time to think about pensions is yesterday. But it is never too late to make a difference. You can set up a pension now and the compound interest will mean that you can still make a massive difference to your retirement plan. Finally, bear in mind too that you can choose eco-friendly funds to invest your  pension contributions  into,  which could make a positive impact on society and future generations.’


9. Things can happen, so mitigate the risk

‘I was someone that thought nothing would happen to me — and then I lost my partner. We had zero protection so I had to deal with all the financial aspects on my own. That's why I'm passionate about finding solutions that can mitigate the risks people are exposing themselves to,’ says Vas. ‘Most people think of life insurance when they think of protection, but actually the most claimed-against policy is income protection, which protects your income after employer sick pay finishes. A lot of people also have life insurance on their mortgage, but don’t know that there are policies to pay off bills too or leave an income for your family after you pass away. These are all mitigating strategies to look into, because if you don’t have an income coming in everything else collapses without careful planning.’


10. Budgeting is the foundation to healthy finances

‘Having something as simple as a bank app on your phone to track your income versus expenditure can help you to realise how much you are spending and on what,’ says Vas. ‘I would avoid credit cards if you can, but if you do want one then keep an eye on it, have a spending limit, pay it back every month and look for 0% on balance transfers. When people don’t budget they end up spending money on things they don't need. And if you're in debt or spending all your money every month, you're not in a powerful position. You’ve got nothing to build with, or to invest in protection policies that can form part of a strong financial strategy.’