According to a recent report, more than half of women in the UK say they do not feel financially self-sufficient.
The report, commissioned by a global investment firm, found that women here in the UK felt more financially stable than their counterparts in Europe but less than women in some Asian countries.
Fidelity’s annual ‘Global Women and Money’ study found that out of more than 6,000 participants from the UK, Germany, Hong Kong, Japan, Singapore, China and Taiwan, 55% of those in the UK did not feel they were financially self-supporting.
Among the other regions only 33% of German participants said that they were comfortably self-financing. However, women in China and Taiwan showed the highest levels of financial independence among women, at 69% and 72%, respectively.
So why is financial self-independence so important? As International Women’s Day approaches on March 8, 2023, now is a good time to shine the spotlight on financial equality.
Having financial independence provides an individual with the ability to shape their own lives and in turn empowers them to make their own decisions. As such financial independence is fundamental to enabling our live choices.
It also provides control, allowing someone to adapt their financial position to changing circumstances, providing the flexibility to overcome challenges and take full advantage of opportunities. To put not too fine a point on it, financial independence allows an individual to shape their destiny.
On the flip-side, a lack of financial independence leads to inertia and being unable or unwilling or to make financial decisions will inevitably have a significant impact on our ability to make a range of choices later in life.
According to the findings of the study, the twin challenges of the rising cost of living and the continued inequality between male and female income continues to be one of the main challenges for women trying to achieve financial independence.
And whilst all households are feeling the effects of spiralling inflation, women’s finances are often squeezed to a larger extent.
This is due to a phenomenon known as the ‘pink tax’ – where women tend to use a larger proportion of their income to pay for consumable items for the entire household (think grocery shopping, clothes and holidays). A significant part of their income will also be spent on their children or grandchildren compared to that of their male counterparts.
As a result, this often leads to women focusing their finances on paying for the ‘here and now’ rather than looking to the future and planning long-term savings goals to deliver financial independence.
So, what steps can an individual take to move to a more stable financial position?
Particularly given the current tough financial climate, it is important for women to reassess their current financial health, looking at how they cover day-to-day living expenses whilst also taking steps to build a financial safety net to protect them in the future.
This includes setting up separate funds – no matter how small in the beginning – to encourage a regular long-term savings habit.
Ensuring your pension is fit for your long-term retirement plans is a critical part of financial independence in later life. Although many people, regardless of gender, put off saving into their pension, particularly when they are in their 20s and 30s, the old adage that you are never too young to start is certainly true when it comes to pension savings.
Although many of us now have workplace pensions offered to us as standard, it is worth considering how you can utilise this tax efficient saving opportunity to work to your full advantage by regularly reviewing and topping up your pension.
Other investments also need to be considered as part of the overall financial planning mix and a strong a varied portfolio which will weather the current economic storm are arguably one of the most important and valuable weapons you can have in your arsenal. This is where a specialist financial planner can be invaluable as they have both the time and the expertise to help you spread your risk and maximise your return on investment, based on your life goals.
Empowering women to feel that they have control – managing not only their day-to-day outgoings but also their future savings, pensions and investments – is vital to achieving financial independence and, as our general life expectancy continues to rise, it is undoubtedly more important than ever.
Our team of financial planning experts are here to help you with all aspects of financial planning. Let us help you put in place plans that will help you achieve financial independence – get in touch now.