Are you happy with your relationship with money or do you wish you could make better decisions about your finances?
Our relationship with money can be complex, and before you can get better at managing your finances, it helps if you can understand why you handle money in the way you do.
There’s no doubt that women often think differently about money than men. We also tend to have less of it – not necessarily because we don’t make such smart decisions – but because we may be paid less, or have taken time out from work to bring up a family or to look after our parents.
But there are some traits that appear to be more common in women than men. You don’t have to think like a bloke to get the most from your money (and sometimes that can be a bad move!) but it’s worth looking at whether your own approach to money is getting the best results.
Are you a serial spender?
Research by Professor Karen Pine, a psychologist who has studied women’s relationship to money and co-authored a book called ‘Sheconomics’, shows that women can struggle to take control of money more than men. It doesn’t mean we can’t take control but – according to Karen Pine – we would rather avoid the problem.
Do you:
- Go on shopping sprees to cheer yourself up; even if you can’t afford it?
Research from Sheconomics shows money worries make us likely to splurge more.
Buying something on credit can have long-term consequences on your finances, which you may still be dealing with long after you’ve grown bored with whatever it was you bought in the first place. If you owe money on your card and want to pay it back quickly, consider a balance transfer credit card with a lengthy 0% introductory period, so you can work on clearing your debt without being clobbered by steep interest charges. Find out more about balance transfer cards and see the current best deals in our guide Balance transfer credit cards and personal loans compared.
- Buy clothes and shoes you don’t need?
Many of us will admit to having clothes or shoes at home that we’ve never worn, or worse that we’ve never even taken the tags off.
Being in control of your money and spending it are not mutually exclusive. This isn’t about depriving yourself of things you like, it’s about working out your priorities and developing a money plan. Treating yourself to clothes and shoes can be part of that plan, but so should building up savings. Read our article 19 ways to cut clothing costs to find out how to keep your spending on clothes down.
- Keep borrowing on your credit card?
Credit cards aren’t inherently evil – for a start, they give you useful consumer protection if things go wrong. But they should be used carefully as they can encourage you to spend money you don’t have.
If you find it hard to break the cycle of spending money you don’t have and worrying when the bills come in, one trick is to think about how great you’ll feel once you’ve paid them off (the carrot) and to remind yourself of the consequences of spending (the stick). If you think you’ll be tempted, leave credit cards at home when you hit the shops or team up with someone else who’s also watching the pennies (like a diet buddy, but for cash).
Do you think money isn’t important?
We don’t all have to turn into the kind of people who measure everything by its financial value in order to be better at managing money. Cash may be king, but it shouldn’t be the most important thing in your life. Having said that;
- Money does matter.
How you manage your money can make a big difference to what you’re able to do – both now and when you stop work.
Some of us have quite a guilty relationship with money. It’s as though we don’t really feel we deserve to have money, so we don’t treat it as a real part of our lives. Whereas we’re quite happy to spend hours choosing a holiday or shopping around for a new pair of shoes, we’d rather not spend half an hour going through our bank statements to find out exactly where our money is going.
- You don’t have to be a natural at money management.
Some people find it easy to budget and save, others find money slips through their fingers without them noticing.
Don’t feel that your current money habits are the ones you’re stuck with. Getting better at managing your money doesn’t have to be difficult. But you have to be prepared to invest a little time in making changes. Check out our Managing your money section for lots of articles on how to budget effectively and keep your outgoings to a minimum.
- Do you invest for your future?
Some women are very comfortable putting their money into stock market-based investments, but many prefer savings accounts or lower risk bonds.
There’s nothing wrong with being a cautious investor and how you feel about risk is very personal. If you do some research and then decide it’s not for you, that’s fine, but just make sure you don’t dismiss investing out of hand without finding out more about it. It doesn’t have to be all or nothing, you can start investing small amounts – as much as you feel comfortable losing – until you’ve got used to the idea.
Some – although by no means all – women also might be wary about tying their money up in pensions for the long term. Although it’s definitely not a good idea to lock money away if you need access to it, you shouldn’t dismiss pensions out of hand, especially because your contributions will benefit from valuable tax relief and free employer pension contributions if you’re paying into a company scheme.
The rules state that you can’t access money in a pension fund before you reach your 55th birthday, rising to 57 from 2023. If that worries you, you can always start saving into an ISA as well as a pension (a cash ISA if you think you’ll need the money in a few years time and a stocks and shares ISA if you can leave it for ten years or more). Find out more in our article Is it better to save into an ISA or a pension?
If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,500 reviews on VouchedFor, the review site for financial advisors.
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