The saying goes that if you teach a woman, you teach a nation. As a financial adviser, I’ve come across a number of women who don’t take their finances seriously enough. This women’s month I want to empower those women by sharing some advice on how to overcome some of the most common money issues I see facing women today.
Not being involved enough in the family finances
When I was young, I was taught that a man is the head of the house and he should make all the decisions for the family. Although times have changed, I still see this playing out today. A woman might hold an executive position at work, perhaps even earning more than her partner, but is uninvolved in the family’s financial affairs. Her partner will usually take care of this aspect while she looks after the household. This is often the agreement between both parties.
However, both parties should really be involved in the family’s finances; from the budget implementation, to how the funds should be spent, saving for retirement and to the choice of the financial adviser. You must familiarise yourself with the joint credit agreements such as your home loan, ask questions and understand the terms that are offered or have been agreed to.
Find out what risk plans are in place should one or the other of you pass away; is there life cover available to help the family in this eventuality? There’s also retirement to consider – stats show women tend to live longer than men so you need to make sure you will be able to live comfortably at retirement.
These might be difficult discussions, but they are essential to your financial wellbeing.
Not having financial goals
It is important for women to have financial goals and be able to follow them through. Some women don’t allocate any part of their income to investment products that are aimed at providing for their future and emergency savings.
A good way to start is to come up with some short, medium- and long-term goals. Short-term goals could be putting money away into an emergency savings account and paying off short-term debts such as credit cards and short-term loans. Medium-term goals could be savings in order to study for a post-graduate qualification or savings towards the deposit on your dream house, and long-term goals would be savings for retirement.
Your financial goals need to be realistic and attainable. You must commit and hold yourself accountable so that you are able to achieve them. They need to be as well as flexible enough to change as you change life stages. If you find yourself struggling, then consider consulting a professional adviser.
Not investing according to investment objectives and risk profile
I’m often asked when the right time to invest is. The answer is very simple: it is always the right time to invest. Trying to time the market is an impossible task. But before you start investing, you need to know what your investment objectives and risk profile are.
To figure out your investment objective, ask yourself what you need your money to achieve. Do you need it to beat inflation, perform better than a benchmark or do you just want it to generate a positive return above a certain threshold?
The second thing to determine is your risk profile. Do you have a long-term goal that might allow you to take on risk? If you can afford to take some risk, you probably should. But don’t be put off by bouts of volatility; stock market falls can represent a good buying opportunity. It’s a bit like shopping at a sale – you’re likely to buy when prices are marked down, not hold off buying until prices rise again back to where they were.
If you are saving for the short-term then funds should be allocated to a low-risk investment as you don’t have time on your side.
While investing can be daunting, there are plenty of resources to empower yourself. A financial adviser can be a very valuable partner on your financial journey. Find your NFB Private Wealth Manager now.