Alison Pask has been working in financial services for 30 years and is an expert on financial education. Here she sets out her top tips to help you make the most of your money.
Plan ahead – think about what you want in life
I would say start by looking ahead. What does your financial plan need to take account of?
What are your aspirations? Do you want to be a homeowner? Start a business? Are you planning to be in a relationship and have children? Are you ambitious in your career?
It's important for everybody – male and female – to have financial independence. And you can’t have that unless you understand what key milestones you will face and your future aspirations are.
Make sure you have an excellent financial footprint to boost your credit score
Traditionally – certainly here in the UK – women entered marriage and the man was the breadwinner, so all the finances were joint. Things have changed of course, and everybody should be aiming for financial independence. Things happen. Relationships break down.
My mum used to say, “Always have a fiver in your pocket so you can get on the bus home.”
In the same way from a practical point of view, if you’re in a relationship and someone else is the person named on all the bills, you won’t build up a financial footprint.
That will have a negative impact on your credit score, which will make it harder for you to get a credit card or the best interest rates on loans and mortgages.
Keep tabs on your spending and review your budget regularly
Sitting down to create a budget is one thing, but don’t just leave it in a drawer. Your budget should be a living breathing document, or spreadsheet – or whatever suits you.
Lots of banks and credit cards now have great apps that show you exactly what you’re spending and – most importantly – on what.
For example, Monzo’s everyday debit card shows you what you’re spending it on. But there are lots of similar apps out there. So if you’re spending a fortune on convenience food, think again. Go back to your budget and look at what you can afford to spend and what you can afford to save.
Do some research to find the best home for your savings
There are lots of savings options around. Again, think about what you’re saving for. A mortgage? A holiday?
With interest rates being at historic lows, my advice would be to put as much as you can into your individual savings account (ISA) because they’re tax efficient.
If you’re saving for the long term – and you can afford to save a bit more – think about putting savings into a stocks and shares ISA. Money works harder in stocks and shares but remember, they’re a lot riskier.
We all have different circumstances, so think about what level of risk is best for you.
There are key points in our lives when we should seek advice, for example when buying a house, planning a family or as we change careers. As you enter different phases of your life, go back to your plans to check you’re still on track and what you might want to change.
Mind the gender pay gap
Men are still earning more in financial services. And men have got better pensions than women because they’re paid more.
As women, we need to be bold, be ballsy, and not be afraid to stand up for ourselves.
There’s an old saying that if there are ten criteria for a job, and a woman thinks she can’t do one of the things on the list she won’t apply for it. But a man will apply if he can do one of the things on the list.
If you value yourself and believe in yourself, you will have a more successful career, earn your place at the table and command the right level of reward. Then you’ll improve your pension, be able to save and invest, and enjoy all the choices that come with that.
Get some financial advice
In the same way you’d choose an accountant, or a solicitor, don’t underestimate the importance of choosing a good financial adviser.
Financial advisers have to be regulated by the Financial Services Authority (FCA). You can find one through their website where there’s also some great advice. You may also want to ask for recommendations from friends and family.
But again, remember all of our needs are different. What suits your Uncle Fred or Cousin Jo, won’t necessarily suit you.
You work hard to earn your money, so it’s important to make it work hard for you. Sound planning and good advice can make the difference between a bleak future or a prosperous one. It’s time to start asking yourself those questions!
Alison Pask is Managing Director of Financial Capability and Community Outreach at The London Institute of Banking & Finance.