Money lessons can be the most difficult of life's obstacles, but as painful as they can be, they can also be the most useful and instructive.
It's also of many areas in life where women fall behind. Yes, there is a gender financial literacy gap, wherein more men have a certain level of financial knowledge than women. This can't help with the gender pay gap, also skewed in favour of men.
For financial services entrepreneur, money coach and Money Savvy Parents podcaster Laura Weston, to fight this we must begin by finding the opportunities that money can gift (and sometimes restrict) us from experiencing and taking lessons from that.
Let's talk money.
“Money can set us free, or it can handcuff us to a life of worry and stress,” she says. There are ways for it to empower us.
Here are Laura's top seven money lessons for an empowered future.
“Even though we are in the 21st century, there is still a massive pay gap between men and women," Laura says. ”Understanding this and asking for what you are worth, takes great courage and practice.
"Practice, practice, practice and then ensure you don’t end up disadvantaged just because you are female. When negotiating on salary, ensure you get close to the numbers…. what is your desired outcome? What is the minimum you would settle for? Then always start at least 10% higher than your desired outcome. Don’t be scared to ask your potential employer the same questions.
“I believe in being open and honest, instead of the cloak and dagger approach. Think outside the box – are there other benefits that you would value more than the salary? Lastly, look at the industry standards, talk to other employees and if you aren’t happy with the offer then walk away, believe something better will come along! Life is too short to be underpaid, you will end up resenting the job!”
It's time for change.
“Working towards your financial independence will ensure that you always have a choice and options,” Laura explains. "This can sometimes be an uncomfortable conversation when entering into relationships, but completely essential to protect yourself from every possible outcome. This doesn’t mean you can’t have joint assets and bank accounts, just ensure you are never reliant on anyone else!
“Talk to your partner openly about money from the outset,” she suggests. “When you start living together, have regular monthly or quarterly money dates to ensure that you are both fully aware of the financial position. As your family or personal situation changes, ensure that you are both retaining some independence.
"Consider things like whose name the financial products are going in, who’s contributing what amount and where is best to hold money both jointly and individually. Don’t be scared to request for financial agreements to be put in place before entering into anything new.”
“Whether you’re a mother or not, having awareness of the financial implications as your circumstances change is paramount. Very often when we become mothers, we change our working patterns, our priorities change and some even ‘give up’ their careers,” Laura says.
“We all have to do what’s best for our individual circumstances, but becoming a mother doesn’t always have to mean giving everything up and changing our whole lives. It takes two people to make a baby!”
Laura's top tip is this: "Consider the finances before getting pregnant – how will you pay for the things the baby needs now and in the future? It’s best practise to do some calculations on what the maternity period will look like.
Let's talk money!
“Fathers now have equal rights with one year of maternity leave, so a lot of parents now split the maternity leave and do six months each. Lastly, when finishing work to have the baby, create a plan with how you will stay in touch and what work looks like for you when you return. Employers are often grateful to know what to expect and see ongoing commitment to your career.”
“You may have heard this saying before but it’s important to highlight that you can achieve and earn more than enough for yourself without involving a partner. In the 50s and 60s the only way women could grow wealth was to marry a rich man, that’s not the case any more: you can achieve everything and more on your own. Make your own financial plan for your own financial future without relying on anyone else.”
She suggests making plans for saving and investing in yourself ASAP: "As soon as you start work after study, make a plan to put some of your earnings into your future self. You can choose the percentage as long as it’s something, ideally you want to aim for at least 10%.
“Whether it’s saving for something in the medium term like a new car or longer term like your pension for retirement. You choose, make your plan, set goals and work towards them….it might seem boring but you’ll be thankful when you have the money at the time you need it.”
“Don’t be scared to spend money on yourself,” Laura says. "You’ve worked hard for it and deserve to treat yourself in one way or another. An easy way to do this is to segment your money into different pots of money; bills, food, car, kids, beauty, treats. This way you are giving yourself permission to have a treat!
“Spending money on yourself can feel uncomfortable or for some an addiction. Every time you get paid, give yourself permission and control to buy something for yourself up to a certain value. To avoid impulse buying, keep items in your online basket for at least 24 hours and if you still think it’s the right purchase for you after that time, then go ahead!”
Something to bear in mind: “Be cautious of who you tie yourself to financially: what I mean by this is, anyone you might hold financial products with,” Laura says. “It could be partners, parents, friends. Once you are affiliated with them it could affect your credit rating, particularly if they are bad with finances. Whilst we’re on this subject, make sure you are well educated on how to build your credit score.”
She adds: “Your credit score is probably your most precious asset, nurturing and growing the score is something to work on regularly. I can highly recommend the CreditKarma app to easily keep track of your score. Most people don’t realise that something so simple as changing address can have an impact on your score! If you want to do a deep dive on this subject, check out my podcast episode.”
It's all about being open. “We are lucky enough to live in a free world, but unfortunately some people still think talking about money is rude,” Laura says. "We need to be the generation to change this, and talk about money with friends and family. This doesn’t mean to show off or boast, but share any money hacks you find, celebrate your successes and encourage each other to earn and grow more! Let’s remove the money taboo together.
“Start off by talking with the children in your life about subjects linked to money like what things cost or how bank accounts work; whether that’s your nieces, nephews or the neighbours kids!! Allow them to be inquisitive and ask questions. Then get comfortable sharing any successes or tips with your closest friends. The biggest challenge is to talk openly with our predecessors; tread carefully, be open within yourself and thank them for anything they do share. Remember this is new territory for many, but it's necessary to change the generational habits.”
