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NOW HEAR THIS
Mapa Research, a unique digital banking research and consultancy firm, mentioned us in their article which is about how helping women with financial planning may be banking’s next marketing tactic. “While we are more and more in control of ‘household’ finances and managing budgets at home, we ladies are still less likely than men to invest or save – and there exists a pensions gap between men and women that doesn’t stem entirely from the pay gap.” Read the full piece here.
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THE LOW-DOWN
Different women, different habits
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If you’re anything like us (as in, a little bit nosy) - you’ve probably wondered how like-minded women earning different incomes are spending and saving their money.
But first, a little bit of context. We’re living in notoriously uneasy times; income inequality is continuing to rise in the UK at an even higher pace than most other developed countries. As a result, economic discontent is rife - the FT reported on how this economic disparity served as a big contributing factor to Brexit. The statistics on income inequality speak for themselves: according to official ONS reports, the top 10% of the population have net incomes nine times (£83,897) higher than the households in the bottom 10% (£9,277). In 2012 - the most recently surveyed year - the top 1% had an average income of £253,927, which is 12.7% of all income compared to the 9.8% in 1970.
So, the reality is that we all fall into widely different income brackets, which is why we found this article by ELLE magazine so insightful; it looks at six 30-year-old-women with very different incomes and finds out how they spend and save. You can also take a look at a similar article by Esquire, interviewing four women with four very different incomes about the lives they can afford - from a single mother living just above poverty line to a real-estate millionaire.
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OFF TO YOU
The ABC’s of pensions
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One of the many reasons we avoid tackling our finances head-on is because it just seems so...draining. All that financial, technical jargon can leave even the most driven of us feeling totally unmotivated. It often helps to go back to the basics before throwing yourself into the deep end, which is what we want to do with you this week.
First, let’s recap on pension funds: a pension fund is a pool of money accumulated from contributions from employers, employees, or both; it is invested in a range of assets - cash, shares or bonds - and is a tax-efficient form of saving.
Below is an overview of the three different types of pensions available in the UK:
- Workplace pension: Most employers offer pension schemes, but if yours doesn’t, don’t worry - all employers will be legally required to provide pension schemes as of April 2017. One of the perks of a workplace pension is that your employer will generally match your contributions.
- Personal pension: This is independent of the contributor’s employer, i.e - you can have the personal pension in addition to, or instead of, the workplace pension. The personal pension is an individual contract between you and the pension provider; you choose the provider and determine the contributions. You may want to consider this option if you are self-employed, or if your workplace pension isn’t sufficient. There are two types of personal pensions; stakeholder pensions or self-invested personal pensions (SIPP).
- State pension: Once you reach pension age, which is currently 60 but is expected to rise to 67 by 2028, the government will give you regular pension payments. You are eligible for the state pension if you have paid National Insurance contributions throughout your working life.
That’s all nice and straightforward, but once you dig a little deeper, the technical jargon becomes overwhelming. From ‘defined benefit pension’ to ‘tapered annual allowance’, ‘automatic enrolment’ and ‘annuities’, we created this pension jargon buster in nice and plain English to help you navigate the world of pensions. Take a look at it over at Vestpod.
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THE BIGGER PICTURE
Being prepared is half the battle
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“What are the benefits of working with an adviser? What should I prepare before seeing an adviser for the first time?”
This week in ‘Ask an Expert’, Rachel C, a professional financial adviser, will be answering these questions. If you’re new to the world of financial advisers and are feeling a little intimidated by the whole ordeal, don’t worry. We’ve been there. To help you alleviate the stress, we’ve asked Rachel for tips for that first and most nerve wracking meeting.
Although there are a couple of things you’ll need to have prepared, the main thing to do is to stay relaxed. Having a good understanding of the financial structures you have in place will be enough to get through the first consultation; make a list of any debts, investments and work benefits (this includes health or life insurance, share options and pension schemes).
In essence, try to think of your first meeting as a bit of a fact finding mission; it’s basically an opportunity for you to understand the adviser and firm a little bit better, and for them to understand you and your needs. At the end of the day, it’s crucial that you feel comfortable with and are able to trust your adviser - finding the right match is the key to making the relationship worth your while.
You can read the full, incredibly insightful and practical checklist of how to best prep for a meeting with a financial adviser here.
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We appreciate your time!
See you next week.
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