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Taking control of your finances – what women need to know

By 2025 more than 60% of the UK’s wealth is expected to be in the hands of women. Make sure you’re ready to take control of your financial future.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

By 2025 more than 60% of the UK’s wealth is expected to be in the hands of women. Women will have more financial power than ever before. Wealth is quite often passed down to women by their husbands, so the likelihood is that we’ll be in control of both short and long-term finances at some point – it’s important to make sure you’re prepared if it happens to you.

Becoming more financially literate will give you clarity and confidence for now and the future.

Here are some important finance fundamentals and potential pitfalls to get to grips with, to make sure you’re in control of your own financial future.

1. Set (and review) your budget

Budgeting is the cornerstone of financial health and good financial planning. Unfortunately, the word ‘budget’ can have negative connotations. People can think budget means basic, or associate it with restrictions – when in actual fact, it helps set you on the right track to achieving your goals. Living without a budget is like going travelling without a map, it can be done but it’s often more expensive and inefficient.

Setting a budget encourages good spending habits so you’re less likely to overspend and fall into debt. It can also increase your capacity to save by identifying areas where you could spend a little less. Build saving into your budget and save on the day you get paid.

It’s important to have some savings under your own name so you can access the money quickly if you need to. It could help to set up a standing order to move the money to a separate account so you’re less likely to spend it. Even better, if your employer offers salary linked savings then the money can be deducted before hitting your bank account.

Get started with our Household Budget Planner. Remember to regularly review your budget, it’s a living calculation and needs to reflect changes in your personal circumstances.

2. Your credit score matters

If you ever want to buy a house or take out a loan – then you should take the time to check and manage your credit score. It impacts how much credit you can access in the future, this includes credit cards, mobile phone contracts and monthly insurance premiums.

Your credit score is how lenders will assess the risk of lending you money. It’s an assessment of how good you are at managing debt. You can check it for free with one of three agencies, Equifax, Experian or Call Credit. Please note your score could vary between providers.

If your score is lower than expected, check all of your personal information on file is correct. Making sure you’re registered on the electoral roll can also help with identity checks.

Get your name on some bills, if you’re living at home with your parents then paying your phone bill monthly via direct debit can be proof you’re a good candidate for credit. Try to make sure your bills are paid on time – this is fundamentally what lenders are trying to assess and not doing so will lower your score.

Be aware, the last 6 years’ worth of financial decisions will be held on your credit file – this can include financial associations like your partner’s spending habits. Shared utility bills can also sometimes create a financial link – it’s important to check you’re not associated with any ex-partners or old housemates. If you are then let credit reference agencies know to break the link.

3. Have a plan B

The last 12 months has taught us that there are only two certainties – uncertainty and that we don’t live forever. The answer to a plan B is two-fold.

In the short term, everyone needs an emergency fund. This is rainy day money for unforeseen circumstances. You should normally try to have 3-6 months’ worth of expenses – the ‘needs’ not the ‘wants’. However, if you’re in or approaching retirement then this increases to 1-3 years’ worth.

This safety net can cover any unexpected costs, like having to replace any white goods or needing car repairs. But it can also give you a buffer and buy you more time should you lose your job or become ill and unable to work. In most cases this should be held as cash in an easy access savings account so you can get to the money quickly and without incurring a penalty charge.

Secondly, long term there’s something to be said for protecting before investing. The main trigger for looking at protecting yourself is down to the number of people that are dependent on you. Equally, you need to look at the support that will be available if you can’t work. Depending on the type of insurance, it can safeguard the future of your loved ones or provide an income.

Three quarters of women over 60 are either single, widowed or divorced when they die. Your partner is not your insurance policy, overreliance on a partner can leave you at a disadvantage and mean that your individual needs aren’t always prioritised.

Thinking about our own mortality is scary, but it’s important to not just cast it aside for another time. More than half of all UK adults don’t have a valid will. If you pass away without a valid will, you die intestate and your estate will be divided according to a fixed set of rules – these rules are often outdated for modern families.

Having a healthy relationship with your finances starts with the right mindset. Money worries are the biggest cause of stress outside of the workplace.

Becoming financially fluent won’t happen overnight, just like building an emergency fund – it takes time. We need to make an active decision to find time in our busy lives and dedicate it to educating ourselves – so sign up to any financial wellbeing sessions if offered by your employer. Knowledge is key to financial independence and resilience. Take the first step and explore the learn section of our website.

This article isn’t personal advice. If you’re not sure what to do, ask us about financial advice.

Women's Week 2021

To mark International Women’s Day, we’re hosting a Women’s Week (8-12 March 2021) focusing on financial security.

We've brought together industry experts and personal finance bloggers to talk all things money, with easy to watch videos to help women challenge their finances.

Check out our financial Women's Week 2021

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Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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