Finance for women: 5 golden rules you should know

The more informed women become financially, the better their finances will likely be. 

We delve into the 5 golden rules of finances for women below.

The widening wage gap between men and women

According to the latest data, the gender pay gap is 14.3%, down slightly from 14.4% in 2022.  While the slight decrease is positive, the gender pay gap is still a huge issue.

The gender pension gap is also a problem as women are, on average, retiring with £123,000 less than men, according to Scottish Widows. 

Despite huge strides in gender equality, women still often take on the role of carer, and this negatively impacts their finances.

Women are much less likely to ask for a pay rise, and women who start their own businesses tend to raise significantly less in investment than their male counterparts. 

So how can women shift the balance to put themselves on a more equal financial footing with men?

Below, we’ve listed our five golden rules of finance that every woman should know.  

1. Achieve financial independence 

Financial independence is about being in personal control of your finances by effectively managing any debts, investments, pensions, and budgeting to achieve your future goals.  

Becoming financially literate can prevent you from being overwhelmed by finances.

Not only that but the more financially literate you are, the better placed you will be to grow your wealth. 

Being in control of your finances also means being aware of all financial matters that could or do impact you.

It’s surprising how many women leave the management of their mortgage, insurance or pension to their partner without knowing the details of the products their partner or spouse has invested in.  

If you’re married or in a civil partnership, make sure you find out all you can about every financial product linked to your household.

If you’re young and single, take this time to learn all you can about finance so you can be well prepared for whatever lies ahead.  

Whether you are single, married or divorced, it’s worth speaking to a financial adviser to make sure your finances are set up to support your future life goals. 

2. Reduce the pension gap  

Why is there a significant pension gap between women and men?

Women are typically paid less than men, and as a consequence, millions of women do not qualify for their workplace auto-enrolment pension scheme as they don’t earn above the threshold needed to qualify for it. 

Women are also more likely to have longer periods of time out of work, meaning they have less time to build up savings in their pension pot.

As a woman, how can you build up your pension pot?  

Firstly, your national insurance contributions determine how much state pension you get. But if you must, or plan to, take time out of work, those contributions cease temporarily.

If you take time out of work to raise a family, make sure you claim child benefit, as you’ll automatically qualify for national insurance credits.

Learn more: how to avoid the child benefit tax charge

These credits then help build up your ‘qualifying years,’ all of which count towards your state pension entitlement. 

If you don’t yet have a pension, a good, tax-efficient way of investing in your future is to contribute regularly to a workplace pension.

It’s also worth finding out about what other pension schemes are available.

Remember, it’s never too late or early to start your pension journey. 

If you’re going through a divorce, take advice on how your pension could be affected, or what pension sharing rights you could have.  

3. Debt consolidation 

Financial worries can have a real impact on everyone’s mental health, and this can spiral out of control too easily, as poor mental health can make it harder to manage financial problems.  

If you have debts, getting to grips with them and putting a strategy in place is an important first step.

The worst thing you can do is bury your head in the sand.  

If you can, begin by paying down those with the highest interest rate and move on from there.

Alternatively, it may be a good idea to focus on paying off the smallest debt first and then working upwards.  

If you have a big balance on a credit card, see if you can move this to a 0% balance transfer card.

These cards offer a 0% interest rate for a set period of time, meaning your repayments go towards paying off the balance only, and not towards interest.  

It's also worth going through your monthly outgoings to see if you can identify any savings that could go towards paying off debts.

Could you cut back on your shopping bill, order fewer takeaways or manage without a gym subscription for a few months?

It’s surprising how quickly these small sums can add up.  

4. Rethink your approach to savings 

Research suggests that women tend to hold more cash than men.

If you can invest for the longer term, taking a bolder approach to investing could get you better returns overall.  

There are many financial products that offer responsible investing or environmental, social and corporate governance (ESG) investing, where funds are only invested in socially responsible companies that take their environmental responsibilities seriously.

So, not only can you benefit from potentially better returns, but you can put your money to good use by supporting the causes that really matter to you.

Remember, though, that investments can go down as well as up, so don’t put away any money that you might need in the short to medium term.  

With the future rises in the state pension age, many may find they need to rely on savings to boost their income in their last few years of work if they don’t want to work full time.

So, having investments outside your pension is a sensible way forward. 

5. And finally… be bold! 

The gender pay gap demonstrates the extent to which women are still, on average, paid less than men.

Take a look at your earnings, consider your earning potential, and whether you should be getting more.

This could mean asking for a pay rise, promotion, or even moving jobs.  

If you’re taking time out of work to raise children, stay connected to your professional peers.

If you manage to find the time amid raising a family, see what you can do to keep your professional skills up to date.

Alternatively, ask yourself if there are new skills you could gain by doing a training course online.  

How can a financial adviser help?

Whatever your situation in life - single, a new mum, recently divorced, working full time or approaching retirement - there are many things you can do to improve your financial situation.

Speak to an expert to find out what more you could do to make your finances work for you. 

You might find our article on the world's richest women informative, too.