Bossing it: Work hard, save hard
The world of work is much more fluid than it once used to be. Gone is the so-called ‘job for life’ that previous generations in our family knew – we’re now a nation of professional flip-floppers, perhaps having as many as six career changes within a lifetime. Whatever realm you work in, the onus is on you to develop your career using a proactive, self-directing approach – actioning short-term goals but also keeping one eye on the future and remaining open to new opportunities.
As a female, this may well resonate with you all the more. You have ambition, are resourceful, realise that success and failure go hand in hand, and you play to your strengths in whatever job role you take on. Do your many strengths translate to managing all your hard-earned money too?
It’s a woman’s world
Breaking free from the career shackles of yesteryear, women are undeniably on the up in the world of work, pushing the boundaries of their careers in all directions. The number of women on boards is rising1, while more women are striking out on their own to become self-employed entrepreneurs.2
The Centre for Economics and Business Research predicts that women will own 60% of UK wealth by 2025.3 For this to come to fruition in the best way possible, due care and attention will need to be paid to manage this wealth as well as you manage your chosen career path.
We’re all at risk of becoming financially insecure if we don’t take responsibility for our own finances, and high-earners are no different. For those in relationships, it’s wise to share the decision-making so that you’re both aware of the ins and outs of your finances, rather than relying on one person to address it.
In partnerships where the male traditionally oversees the family finances, it may be that the female only has financial transparency at the point of divorce or the death of their partner, by which point your investments may already be underperforming or you realise you haven’t saved enough for retirement. This, added to the fact that, as a woman, you may already be at a financial disadvantage, could be catastrophic.
Research by WealthiHer in 20194 shows that women “overwhelmingly believe the role of wealth is to provide for family, security and comfort”, believing that cash is the optimum way to achieve this. Your money may therefore not be working hard enough for you in that you fall into the trap of taking a level of risk that’s inappropriate for your current circumstances. In this scenario, even high-earning women can fall into the trap of struggling in retirement, which could go on for three decades or more.
A taxing task?
What can women therefore do to boss their money as well as they boss their job? Your trusted ally will be your financial adviser, who will assess your financial needs and help you to plan for the future, which may be particularly valuable when it comes to pension planning.
Did you know that the pension allowances rules have recently changed? If so, don’t get caught out.
In short, as of the 2020/21 tax year, the most you can pay into your pension without landing a sizeable tax bill is £40,000 a year, or less if you’re a high earner. During the 2017/18 tax year, more than 26,000 people exceeded the annual allowance for pension contributions by an average £30,000 per person5 – this may result in them having to pay an additional 40%–45% in tax.
The UK government’s recent U-turn regarding the furlough scheme may see some people still working minimal hours while others are struggling to keep their businesses afloat. To this end, your priority may understandably not be about maximising your pension contributions.
This, again, is where consulting a financial adviser comes into play. If you don’t have the funds spare to maximise your pension allowance this year, you might be able to carry forward any unused allowance from the previous three years.
Whatever your niggling doubts are to do with savings, tax efficiencies or more, our financial advisers are time-served professionals when it comes to pension planning here at Wellesley. Lead from the front and get in touch today on 01444 244551.
1 Hampton-Alexander Review, November 2019
2 Trends in self-employment in the UK, Office for National Statistics, February 2018
3 Centre for Economics and Business Research 2005
4 WealthiHer Report 2019
5 Pensions Annual Allowance Statistics, Office for National Statistics, September 2019
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.