Listen to this article
We’ll discuss how important it is to grow our financial confidence while understanding the barriers that we all face. We’ll tackle six key financial moments in life and think of ways we can prepare for them. This isn’t about becoming a superior investment expert; this is about having a basic understanding of our financial health.
In this module you will learn about
- the six key moments in a woman's life and
- how they interplay with money
Life moments and the role of money
We talk a lot about preparing for the future financially, but what does the future look like? Think about some of the key life events that we all face and try to get an understanding of what may come up in the near and long-term future in your life. Are you starting a new job? Do you want to buy a house or start a family? Do you hope to own your own business someday?
The Chartered Insurance Institute has identified six key moments in women’s lives where financial planning matters the most to secure your future. These are:
- Studying and education
- Entering and re-entering the workplace
- Getting married or divorced
- Becoming a mother or a carer
- Ill health and death
While we each may have drastically different situations regarding each of the key moments, we’ll all face similar financial planning decisions and have to ask ourselves some critical questions.
Did you know that, on average, women spend twice as long as men on domestic work and childcare (36 hours compared with 18 hours per week)? 1 in 7 of women in their 40s are caring for an adult and children.
The Insuring Women's Futures Financial Wellbeing Guide says: "Women and girls are increasingly successful at school, at university, in the arts and in business. But there remain inequalities, imbalances and inconsistencies that undermine our financial security. We encourage everyone – woman or man, young or old – to consider how financial risks, could affect you, your friends, colleagues or family."
Should a partner die or should the couple separate, each should have an understanding of the other’s financial situation. Just look at the divorce rate as an example. About 71% of divorced people did not discuss their pension during divorce proceedings. That translates to women missing out on £5bn every year.
Did you know that the maximum amount a non-earning partner can invest in a pension is £2,880 per annum, reclaiming tax of £720. And only 21% of millennial women have discussed their pension saving in detail with their partner.
Similarly, it is helpful for partners to think seriously about if and how they will take time out of their career to care for children or older family members. Perhaps this means sharing the burden or working on a more flexible schedule. No matter the solution, such a move should involve plenty of conversations with partners, other family members and maybe a supervisor at work. Knowing the reality of the cost of a career break may lead to different budgeting and saving plans in advance.
We each need to think about what we want and how we may approach the different life changes, and how we can financially prepare for them. Being aware of the potential opportunities but also the risks they might bring is the first big step. Understanding your situation and planning in advance will help you to avoid unwanted surprises when you expect them the least. What matters most is to have an open and honest discussion with your partner, family and friends. Just like they would support you if you’re ill, they’re going to be there for you when you need to talk about money too.
Awareness is the greatest agent for change.
Key takeaways and what comes next
You’ve now read about the six key moments in life and the need to familiarise yourself with the most common pitfalls and the actions you can take to increase your financial resilience. As frightening as the statistics might be, the good news is with a little bit of planning you can avoid the big risks. And YOU are doing exactly that already, by reading all this.
Go through the life stages and study the financial wellbeing guide which provides amazing statistics and very valuable recommendations. Think about how you (and your partner) want to approach them and plan ahead. Help other women to increase their financial resilience by talking about them with the key people in your life.
In stage C3 of our learning journey, we have prepared detailed guides and articles for each of the key moments in life. To jump ahead, please go here. Otherwise please continue to the next module where you will look at Happiness and money and explore what they have in common.