Women and money

GETTING the nation to save enough for the future is no mean feat. Sure, people are saving, but many people don’t engage with their finances and end up making poor decisions. With bursting to-do lists (admin seems never-ending) anything to do with pensions and ISAs can all too easily fall by the wayside. And indeed, it does, according to a new study by Fidelity which shows that women and money have a difficult relationship… women are letting things slide when it comes to money.

When saving into ISAs, women were most likely to choose lower-risk cash accounts, while men typically favoured stocks and shares accounts.  That’s not a smart use of savings if you compare returns. Investing a full ISA allowance in stocks and shares over the past four years, would have seen the value rise by 25%, compared to a 0.44% return if left in cash.

Women and money

When it comes to retirement savings, women are still lacking it seems, according to the same report, ‘The Financial Power of Women’. The average pension pot for a young woman will be 11% less than for a man by the time they retire.  This might not be down to apathy in saving, of course. Women often face financial setbacks caused by career breaks to raise children —if the cost of childcare is so high, it makes sense to stop working if you’re working your socks off just to pay the nanny.

The problem is then compounded by the fact that for the years they are working, women are likely to earn less than men too. But it’s not just that. More than half (52%) admitted that they don’t know where their pension is invested, while 37% have no idea what it is worth.

While saving for the future is commendable, it’s not enough. People need to be engaged with their savings and investments. A lack of trust in financial services doesn’t help matters. Over three quarters of women in the study so they have no confidence in investment providers. This is a long-standing industry problem.

Time to get sorted

The conclusion of the Fidelity report is that women need to save more. This isn’t new news, of course. You might not need to stash away as much as you think, though. Brain boxes at Fidelity have calculated that it’s possible for women to close the gender pension gap by investing an additional 1% of  their salary into their pension. Crucially, they need to making smart investment decisions, whether it’s for their pension or their ISA. With one in 10 women saying they do not feel comfortable selecting financial products, the financial services industry has a challenge to make investing more accessible.

It’s not completely inaccessible, really. With so many companies springing up to help you make more informed and better value choices (use Compare+Invest to select your DIY investment platforms) there’s lots of help at hand. Plus there are more than 26,000 regulated financial advisers[1] in the UK today who can offer recommendations for how you can get your money working hard.

It doesn’t really matter whether you’re male or female. The point is, that leaving the money stuff un-ticked on the to-do list means you’re losing out on a secure financial future.

The message is clear. Engage, engage, engage.

[1] https://www.fca.org.uk/publication/data/data-bulletin-issue-13.pdf 

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Article is accurate at date of writing.