Who Looks After Your Finances?

When it comes to asking important financial questions about investments, retirement planning and mortgages, one in four women with partners make the financial decisions in their relationship.  Only 7% of women questioned said their men took control of their finances.

One in five women said they made the investment decisions too, while 22% said they made decisions about the couple’s financial future by deciding which pension to invest in¹.

So it is quite probable that there has not been a better time for women to take control of their finances. Indeed, by 2020, more women than men are expected to have the final say on financial decisions affecting the home, according to the think tank Future Foundation². They predict a power shift, with women’s incomes overtaking men in the future and taking greater responsibility in the financial decisions relating to the home, which 50 years ago was an exclusive male preserve.

It does seem that women are developing a better grasp of financial products and are more likely to understand the intricacies of the household balance sheet than men³. Even if financial equality has not been fully achieved yet, women are becoming more financially successful and independent than ever.  And with that comes both the responsibility and ability to organise and manage their financial futures.

Twenty years ago, only 7% of women earned the same or more as their partner.  Today, the figure stands at nearly 25% - and is rising, which gives credence to the findings of the Future Foundation.

So what are the key issues that women need to consider in planning their financial futures and those of their partners?  The mainstays of any wealth management strategy are Investment, Tax Planning, Retirement Planning, and Risk Protection. The other important consideration is obtaining professional advice from a specialist wealth expert.
 
As far as Investing is concerned, it is important to determine attitudes to risk from the very outset. Risk normally means a combination of two elements. The first is the possibility that you may lose some – or in extreme cases, all – of the money you have put into a particular investment.  The second is the risk of volatility – short term fluctuations in value.

Getting the investment right is crucial to future financial wellbeing - but not even the very best investment manager has a crystal ball. Investors often worry that they are investing in the market at the wrong time, but running an investment portfolio on the basis of getting the timing right rarely works.

But what good investment managers can do is distinguish between companies that are better managed than others, and in sectors that can be expected to do better as current trends develop. They run their funds and select their holdings on the basis of medium to long-term assessments of business and economic trends.

Briefly, with Taxation Planning, inheritance tax (IHT) is a growing issue for more and more of us following the rise in property prices this decade. While many people are aware of the existence of IHT planning, few still do anything about their potential liability. IHT is a time bomb waiting to go off, and once it has, Her Majesty’s Revenue & Customs gives only a relatively short time to pay, meaning that a property may have to be sold quickly by a person’s executors in order to make the payment.

With Retirement Planning, if you have not done so already, the time to start planning for retirement is now. Childbirth, marriage, divorce and being widowed have all had a significant impact on the pension accrual of many women. Women’s pensions are affected by the career breaks they take to bring up children or care for elderly relatives. The new rules on pensions introduced in 2006 have introduced a simple, single system making it easier to plan for your retirement, but it remains an area where it is essential to seek professional guidance. For more information on Women's Pensions Click here

Finally, none of us likes to think about suffering a critical illness. And many of us, either as individuals or in many cases as businesses, tend to bury their head in the sand rather than doing something about it. It is rather like making a Will. People would rather put off thinking about it until later. Yet the effect of doing so can have unthinkable consequences on financial futures and families. 

Take the plunge in the 2008 and secure your financial future!

Information provided by St. James’s Place Wealth Management who produce free informational guides covering Wealth Management, Retirement Planning and Inheritance Tax Planning. To receive your free copies contact Faye Formisano of the St. James’s Place Partnership on 0113 212 5712 or 07973 437520. Alternatively, email faye.formisano@sjpp.co.uk

Sources
1 YouGov Survey - for GMAC-RFC, February 2007
2  BBC News, August 2008, reporting on Future Foundation research
3  M&S Money Financial Decision Makers Report 2005