Equal Pay Day: Financial planning for women – wise up and make a plan!
18th September is International Equal Pay Day, highlighting the global disparity in pay between men and women. And that’s just one of the challenges women face when it comes to financial planning. These challenges can only be tackled with a solid financial plan. We understand that it can be overwhelming so here’s our four-step plan for women looking to achieve financial security in spite of the odds stacked against them.
Financial planning for women: start now!
‘If I had realised earlier that it would mean my pension would be so small, I would have found a way to work more.’
So says Claudine, a French woman scraping by on a small pension, in this article in Le Monde.
Don’t be like Claudine! The key to financial security in retirement is planning ahead. And now is the time to start.
Yes, women are financially disadvantaged at every turn. The gender pay gap, the motherhood penalty and longer average lives are three major financial planning challenges for women, not to mention societal norms that have not traditionally encouraged women to educate themselves about money or to strive for financial independence.
There’s a lot to overcome and it can be overwhelming. But putting your head in the sand and hoping it will all just work out is not the best plan.
It’s time for women to wise up and Infinity is here to help!
We are passionate about supporting women in rising to the financial challenges that they face and helping them plan to thrive, not just survive.
The fact is that if you are a woman – single or married, childless or child-free, 20-something or 50-something – you should have a financial plan.
A four step plan for women looking to achieve financial independence
To tackle the overwhelm, we’ve broken financial planning into four easy steps that you can work through.
Financial security won’t be achieved overnight but by confronting the steps one by one, you can take control of your situation and move slowly towards your goal.
Step 1: Pay off debts
Unsecured debts such as credit and store cards are a big no-no if you want to get serious about your financial planning. You’ll be paying high interest and could easily fall into a debt spiral that will damage your credit score and your mental health.
Minimising these debts is your first task. This will mean budgeting, dedicating a percentage of your income to debt repayment each month, working out a repayment plan and committing to it. Pay off the debts with the highest interest first and consider consolidating debt to take advantage of interest-free periods and lower rates.
Note that secured debts that are well managed – like a mortgage aligned to your income – can be a positive for your long-term financial planning.
Step 2: Set aside an emergency fund
Next, start saving into an emergency fund. Set a realistic savings goal based on your monthly expenses and living costs, aiming for at least three to six months’ worth of living expenses.
These cash reserves are to see you through a short-term crisis, because life is unpredictable. The emergency could be anything from essential car repairs to an unexpected redundancy.
Keep your emergency fund in a savings account where it is liquid, earning some interest and out of temptation’s way. Consistently contribute a percentage of your income, no matter how small, to this account each month. If you treat saving into your emergency fund as a non-negotiable expense it will soon become a habit and you won’t notice the difference in your everyday spending. Over time, as your savings grow, you’ll gain peace of mind knowing you have a financial cushion to fall back on when times get tough.
Step 3: Start saving for retirement
Although they live longer than men, women are less likely to enjoy financial security in old age. Globally, women earn on average 77 cents for every dollar earned by men. That means less disposable income while they work, and consequently, less money to save for retirement. The gender pension gap averages 26% across OECD countries.
If you don’t want to end up like Claudine – surviving not thriving in your golden years – you need to make saving for retirement a priority. Expatriates in Asia have a wealth of choices so at this stage of your financial planning, you should take professional advice.
If you’d like to chat to an Infinity consultant about the options available to you for retirement savings, why not set up a free initial call for an informal chat? You can do that by clicking on this link.
And don’t think that if you’re young, you can give it another 10 or 20 years before you need to think about retirement saving. Starting to save early makes attaining financial security in retirement a lot easier. Find out why here.
Step 4 – Protect your savings
Once you have minimised your unsecured debts and started to build a solid financial foundation with savings, investments, and manageable, well-structured debt where necessary, you need to turn your attention to protecting your wealth.
Protection insurance such as health insurance, life insurance and critical illness cover is essential to shield your savings from risk. These policies transfer risk to the insurer. If life throws you a curve ball – like a serious illness – you won’t have to dig into your savings to deal with the financial fallout.
Your insurance requirements will depend on your personal circumstances and family situation. It’s best to chat them through with a professional to ensure that you have sufficient cover.
Infinity’s consultants have a wealth of experience helping expatriates to protect their wealth with tailored insurance. Get in touch to see how we can help you.
Financial planning help for women in Asia
Whatever your age and wherever you are based in Asia, we would love to help you buck the trend and become one of the minority of women who have a solid financial plan to deliver long-term financial security.
It’s a decision you definitely won’t regret! Wise up and contact us for a chat.
A leading provider of expat financial services and wealth management services across Asia.