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How to boost your financial confidence and manage your money
Managing your finances can be challenging without appropriate support. Here’s four ways to boost your understanding and take control of your money, according to our female investment specialists at Investec Wealth & Investment.
When running a high-growth business or pursuing a demanding career path, it can be easy for conversations about personal wealth management to take a back seat. However, individuals who take a passive approach to financial planning and investment management may exacerbate inequality and delay reaching their personal goals. In particular, this may be the case for women, who are already likely to experience lower pay and levels of pension contributions in their lives than their male colleagues.
“Many of us are setting ourselves further back from our male counterparts because we’re not taking the opportunity to invest any additional cash that we have,” suggests Hannah Goody, a Wealth Planner at Investec Wealth & Investment. “We’re far more likely to be saving money in a bank account or something that isn’t going to be tax efficient.”
However, there are simple ways to improve your financial understanding and make your money work harder for you. Here are four tips from the Investec team.
1. Be proactive: you have to make the decision to do it
The first step in managing your finances is to prioritise relevant conversations. “Stop putting financial planning on the backburner,” Hannah advises.
Making a plan for the future is not a one-off task. A financial plan should evolve with you as you move through life. “Whatever stage of life you’re at – whether you’re getting married, thinking about having children, planning your retirement and so on – it’s important to constantly evaluate what your objectives and goals are,” she adds. Once you have a sense of these financial goals, it becomes possible to work with an expert adviser to understand the various steps you can take to make your money work harder for you.
If you have someone in your network who has worked in financial services for a long time, have a coffee with them. Let them help educate you.
2. Become well-informed
For our Head of Private Office Catherine Kirchmann, building financial confidence starts with staying well-informed about the wider world – and doing so doesn’t always require huge amounts of time.
“Education starts with the smallest thing; pick up a copy of the FT Weekend, start to familiarise yourself with what’s going on in the world,” Catherine says. “And once you’re comfortable with that,” she adds, “start to drill down into what’s happening at a company level. Education is key to building confidence.”
Learning doesn’t need to just be an individual journey; utilising your contacts is an excellent way to improve your knowledge. “Reach out to your network,” Catherine advises. “If you have someone in your network who has worked in financial services for a long time, have a coffee with them. Let them help educate you.”
3. Approach sustainability by thinking about ‘worth’
Sustainable investing isn’t just about evaluating ESG (environmental, social, and governance) risks, which can sometimes feel daunting. Chief Investment Officer Stacey Parrinder-Johnson encourages those who want to invest their money to think about their personal values. “Investec’s purpose, ‘to create enduring worth, living in society, not off it’ emphasises this aspect of investment. It’s not just about making profit, it can be about something completely different”, she says.
Stacey uses her own personal portfolio as an example of how she finds her own version of ‘worth’ by investing in areas she’s passionate about. She says: “I have an investment that funds UK technology companies. There’s still a strong investment case, but I also love the fact that this makes me someone who supports the UK technology industry”.
4. Be future-focused
Finally, taking a future-focused approach to managing your finances can provide you with the platform to achieve your long-term financial goals. “A small amount invested regularly turns into a meaningful pot,” Hannah comments. And it’s never too late. “You can take control of your financial future at 60. There’s still pension contributions you can make, there’s still ISA contributions you can make; there are still things that you can do as you get older.”
While planning for the future can at first seem an intimidating task, Catherine believes that women need to break free of stereotypes and take the challenge on. “There’s a perception that women are bad with money, and that’s wrong,” says Catherine. “It’s a perception that was formed twenty years ago.”
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The contents of this article do not constitute a formal recommendation or personal advice and no action should be taken, or not taken, on account of the information provided. The value of your investments can go down as well as up and you may not get back the full amount invested.