Financial management can feel overwhelming and daunting. But in actuality it gives you the exact opposite; it helps you to feel empowered and free, it gives you control over your financial position and future. It’s something every woman should feel capable of doing. However, we know there is a striking knowledge gap in this area, and we certainly aren’t the only ones to notice it. We chat to Jenny Owen and Anna-Sophie Hartvigsen from Female Invest, an impact startup educating women across 89 countries on money management. To break down some of the barriers to financial management, they share some financial facts that every women should know, and include some of their top tips from their online programme and new book, Girls Just Wanna Have Funds, on how you can feel empowered to not only manage your money but help it grow.

Fact: women are better investors than men

Warwick Business School analysed 2,800 investors, both men, and women, over the space of three years. They found that the female investors outperformed the FTSE 100 (an index composed of the 100 largest companies listed on the London Stock Exchange), but also their male counterparts over the three years. The men’s investments outperformed the FTSE 100 by 0.14%. Whereas the women’s investments outperformed the FTSE 100 by 1.94%, that’s 1.80% higher than the men.

Fact: more women are investing now than ever before

A 2021 study by Fidelity found that 67% of women are now investing outside of their retirement accounts, compared to 44% in 2018. The same study shows that the onset of the Covid-19 pandemic contributed to this surge, with 51% of women saying they started investing since the start of the pandemic. 42% say they now have more to invest since the start of the pandemic.

Fact: women prioritise long-term security over short-term gains

A study of European investors conducted by N26, revealed that only 23% of women prioritised short-term wealth gains, compared to 43% who put long-term wealth as their investment priority.

Fact: if more women invested their money, entire economies would improve!

A UK study by Hargreaves and Lansdown revealed that women’s investment portfolio came out on top by 0.8%. Whilst this may not sound like a lot, imagine if this was replicated over 30 years. Women would have a portfolio 25% higher than men!

A 2021 study by BNY Mellon showed that if women invested at the same rate as men, there would be an extra $3.22 trillion of assets under management from private individuals.

Fact: the gender finance gap still exists

Diving head first into all the data surrounding women and investing, the picture is crystal clear – the gender investing gap exists. We all know that women already lag behind men professionally with regards to salaries, but women not investing as much as men isn’t helping.

In a climate where it will currently take 267 years to close the financial gender gap, women have the power to change the tides of financial power. In fact, investing is one of the best ways for women to grow their money pot over time and establish the financial freedom they deserve.

Female Invest’s top tips to get your finances in check

Set money goals

Financial Planning for Women

So you’ve decided you want to take control of your money, but first ask yourself why? It’s key that you set specific, achievable goals for your investments or savings. Having clear goals will help you stay focused and motivated to make smart investment decisions. Develop a plan for reaching your goals which should include a detailed analysis of your current financial situation, as well as a strategy for investing your money in a way that aligns with your goals.

Good money goals should be SMART: specific, measurable, achievable, realistic & time-bound. Unfortunately, many people give up on their goals before they even have a chance to make progress. But there’s no reason why it can’t be easy. People who are successful in achieving their financial goals practice the following:

1. Focus on your schedule of actions, not the goal deadline – when you focus on your schedule of actions for the big goals, you are more likely to do what’s required to accomplish your goals as a result of your consistent actions.

2. Figure out a way to stay motivated – it is easy to set a goal or think of a goal, but as time passes, we all seem to lose the necessary motivation to complete and fulfil these goals. Even though there will be setbacks and failures when it comes to your financial goals, it’s important to keep yourself motivated. A few ways to do that include creating an award system, setting aside a portion of your budget for fun.

3. Surround yourself with likeminded people – if you’re on a mission to save a certain amount of money, it’s best to be around people who are also in it to win it, just like you. These people can keep you accountable for your financial goals.

4. Seek out more information on personal finance – reading books, listening to podcasts and attending events are all great ways to continue learning and getting inspiration for how to accelerate the route to reaching your financial destination.

5. Start small – we’ve all heard of the snowball effect. For instance, although it may make sense to tackle your largest debts first, tackling all your small debts first is great for your motivation because you’ll get to celebrate those small wins much faster than if you started with your highest balances. This, in turn, will keep you motivated and excited to go after your bigger financial goals. So, as you start to think of your goals, consider how you can set them up so you can reap the motivational benefit of achieving those small wins.

Build a budget

A good way to start investing with little money is to develop good budgeting habits. This means starting off your investment journey with saving. Try the cookie jar method – learn how to save money by putting a small portion away every week, month, or year. Be conscious of where and how you spend your money. Walk through your day and tell your money where to go.

Meticulous budgeting and tracking is a great way to do this. Have you considered a budgeting template? By logging all your income and expenses, you can allocate what goes where using the 50/30/20 rule, where 20% of your salary goes to your savings and investments. By building a budget you can actually stick to, you’re well on your way to the investing universe.

A bit more on the 50/30/20 technique; when following the 50/30/20 rule you divide your budget into three categories:

  • 50% of your income should go to necessities: This includes bills, transportation, housing, groceries, insurance. In other words, it is things you need to pay for.
  • 30% of your income should go to fun: Because you need to have fun. You don’t actually need take-away sushi, but if you remove all the fun stuff, you’re definitely not going to stick to your budget.
  • 20% of your income should go to Future You. This category includes savings, above minimum debt contributions, and investing.

Pay off high interest debt

High interest debt and investing is a bad combo. Why? High interest debt – debt with double digits – is expensive, and so it is unlikely that your returns will be higher than the interest you own.

Let’s say you have a car loan with an interest rate of 16%, and your investment comes back with a return of 9% in the same year, well the reality is that your returns will be cancelled out because you’ll still be paying a whopper on your car loan! So that’s why it can be a good idea to consider paying off high interest debt before adding investing to your personal finances.

And whilst paying off debt might sound daunting, it won’t be the minute a clear strategy is laid out for you. This debt calculator removes all the guesswork for you – all you need to do is type in the figures before we guide you on the right path.

Educate yourself

As always, education is key to mastering the art of investing. Adjust your mindset and remember that investing doesn’t have to be complicated. To get an idea of what goes into investing, learn the core principles, and take some risks. It’s okay to be nervous, but that shouldn’t discourage you from learning the basics and get started with investing.

The more you know about investing, the better equipped you’ll be to make smart decisions. Read books, take classes, and learn from experienced investors to gain a better understanding of the markets and how to invest wisely.

Start small and invest/save regularly

It’s important to start investing as early as possible, even if you can only afford to invest small amounts of money at first. Investing regularly will help you build a diverse portfolio and take advantage of the power of compound interest.

Compound interest means that each time interest is paid into an amount saved, the added interest also receives interest. Basically, interest on interest! This is one of the reasons many investors are so successful.

ISAs and Pensions are two places where compound interest can also really flourish, as they help protect investments from the burdens of taxation on growth. When investments are protected from erosion, compound interest can really start to snowball the value of your investments.

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