Moneywise readers – along with TV presenter Kate Garraway – give their top money advice for women in their 20s. Tips include why a man should not be a financial plan and why it’s essential to start saving and investing.
“If you’re given a choice between money and sex appeal, take the money. As you get older, the money will become your sex appeal,” said iconic American actress Katharine Hepburn (pictured right), best known for her roles in the 1930s, ’40s and ’50s, in which she played strong sophisticated women.
And in 2017, her advice seems relevant still. Several studies this year have demonstrated that women’s finances fall further behind those of men as they grow older:
- Female finances fall behind over time, thanks to the pay gap and the tendency to stay in cash. While more than four in 10 (43%) women save into a Cash Isa, only nine out of every 100 women invest in a Stocks & Shares Isa. (Source: Fidelity International)
- Women who work 42 years face a £47,000 pension fund shortfall when they come to retire. On average, men under the age of 35 received £217 more in employer pension contributions than females of the same age each year. (Source: Zurich, which looked at more than 250,000 pension plans held by the firm between 2013 and 2016).
- Men have almost three times the pension savings of women. The average man has pension savings worth £73,600, compared to £24,900 for the typical woman. (Source: Aegon)
As part of a feature on women and divorce earlier this year, we asked female Moneywise readers to reflect on what they wish they had done differently with their money earlier in their adult lives and to write in with their top tips for a woman in her 20s.
Here are some of the best tips:
“Separate need from want”
Always calculate, using your actual daily take-home pay, how many days of paid work it would take to pay outright, in cash, for any item that is completely desired, but non-essential, after monthly bills and rent are covered, and with the equivalent of at least one month’s rent and bills in hand. With regular practice, this habit quickly separates need from want and means you can make choices about your future yourself. This will mean that you can consider walking away from your job(s)/relationship/educational course, when you want to.
SD – wishes to remain anonymous
“Avoid debt”
Avoid getting into debt where possible for non-essential purchases. Your friends may be credit fans, but in years to come it will catch up with them. Think… if you can’t pay for it, you can’t afford it. The only ‘good’ credit is a mortgage.
Joy Kite
“Actively manage your money”
So many of my friends sat back and did nothing with their money whereas I made sure I was on top of current account offers/incentives, Quidco offers, credit card offers/incentives and utilities offers/deals, which sometimes resulted in me having a few extra hundred pounds to spend (or save) in a year.
Jen Ingram
“Keep money separate from your partner”
If married or living with a partner, have a joint account into which money for household bills is paid and into which set sums are transferred from the personal accounts of each person. Otherwise, keep other money entirely separate and have separate credit cards without the other person being a second named person. However, in the event of a married couple splitting up, do not think that each individual automatically keeps the money in their separate accounts. Generally, lawyers add up all the assets of the couple and divide it in two so if the woman has more money than the man, then she may lose some of it.
Anne Fletcher
“Make your own retirement plan”
Do not rely on a man to fund your retirement. So much can happen in 40 years that you don’t know what situation you are going to be in when you are in your 60s. You can only rely on yourself, even if it’s only £10 a month to start with, it has plenty of time to grow.
Dianne David
Contribute to your pension, ensure you take an active role in reviewing your pension every year via the annual statement and increase contributions when you get a salary increase – as pensions need time to grow.
Kathleen Wheater
“Start saving and investing now”
Start saving NOW and do not think that it is only for the very remote future. Those savings will make you feel more confident NOW, and will give some peace of mind NOW too!
Elena C
Investing might feel difficult if you feel you know nothing about money, but there are lots of great resources available and you can take it step by step. If you feel there’s plenty of time left and no need to rush, I recommend looking up some graphs on what a difference it makes to the outcome if you wait even just 10 years. That should work as a kick up the backside!
Jenni Syrjala
Keep your own separate savings account and start investing early. Also I would say invest in your own property, even if it has to be rented out, then you have somewhere to call your own. Best to keep something that is just for you because you never know when divorce will happen and if you have to start out again as I did in my 40s, with hardly any equity in our house, it would have been something I would have told my younger self.
Fiona Willcox
Set up a standing order into an Isa and every time you get a salary increase divide it into two. One half goes into the Isa, while the other is to do as you please, knowing you are building up a safety net for the future.
Julie Wilson
TV presenter Kate Garraway: “What I would tell my 20-year-old self about money”
I have been thinking about this question a lot recently because I am turning 50. It’s a big birthday that definitely makes you look back at your life and wonder if you should have done things differently and also wonder what the next few decades might hold.
I even wrote a book about it, called The Joy of Big Knickers (Or Learning to Love the Rest of Your Life), in which I get the best advice from experts and celebrities and face my own fears about getting older. I put in a whole chapter on money, because research shows being poor is second only to feeling lonely and invisible in the top things we fear about ageing.
So what would I do differently? Well, in my 20s I lived life for the now. I didn’t have a mortgage, a pension or a savings account, so I wasn’t financially investing or planning for my future. I did, however, work very hard, long days (and nights!), grateful to have got a first job in the industry I loved and determined to make the most of it. And in one way it paid off.
At the moment, I’m lucky enough to have a job in TV and a job in radio. So by most people’s standards, I’m Richard Branson. Only it’s all a bit of an illusion. I’m one of those people who appears to inhabit a glittering world, where thanks to my job I travel to every corner of the planet and go to all the latest shows and movies, often for free. I’m invited to fantastic parties. I get a ready-made social life out of it.
But while I am definitely wealthy compared to many, the reality alas doesn’t match the fantasy. Our car is 10 years old. Like so many people I’ve not paid as much into my private pension as I should have. We still have a big mortgage on our house. And, let’s face it, I’m unlikely to carry on earning what I earn now until the new retirement age – how many 65-year-olds do you see on TV?
So the advice I would give to my 20-year-old self is: Yes, live your life; work hard and party hard because that is how you will become you. But do put some financial foundations in place while you can. Get yourself a pension, even while you are still studying. Money put in when you’re younger is worth much more and before you have a family or other commitments, it’s easier to save.
Start a savings account as soon as you start earning and set up a direct debit to whisk it away the second your pay cheque is in, so you don’t ever see what you’re missing. It may not be much to start with but locked away it will build up and will be a very good start when you want to find a deposit for a house. And try to remember even if now 30 years old seems ancient, in a blink of an eye you will be 50 and glad of what you did back then.
Moneywise has three copies of Kate Garraway’s book, The Joy of Big Knickers (Or Learning to Love the Rest of Your Life), to give away. To win a copy, email editor@moneywise.co.uk, telling me your favourite quote about money from a celebrity or famous person.
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