Financial planning tips for women balancing family responsibilities
Financial adviser Didi offers practical tips designed specially for women in the ‘Female Sandwich Generation’.
Last Updated: 9 July 2024
With the female employment rate reaching 72.1% in 2023 according to data from the Office for National Statistics (ONS), many find themselves navigating the delicate balance of caregiving responsibilities for aging parents while supporting their own families and managing finances.
Referred to as the "female sandwich generation," women of working age can face unique financial challenges that require careful planning and strategic decision-making. In this article, I’ve highlighted some financial planning tips to help, but it’s not personal advice.
If you’re not sure what’s right for you, consider getting financial advice. I also refer to different tax reliefs and allowances, but please remember that tax rules can change, and benefits depend on your circumstances. All investments can fall as well as rise in value so you could get back more or less than you invest.
Budgeting basics
Balancing the financial needs of multiple generations requires meticulous budgeting and management. Start by creating a comprehensive budget that accounts for all household expenses, including caregiving costs for aging parents and financial support for children.
Tip: Identify areas where you can trim expenses and redirect those savings towards long-term goals such as retirement and education funding. Utilise budgeting tools and apps to track your spending and stay on course towards financial stability.
Retirement readiness
While juggling caregiving responsibilities, it's essential not to neglect your own financial future. Retirement shouldn’t be a struggle or a time when you must ‘make do’. It might seem far away and another day’s problem, but it will creep up on you faster than you might think. That’s why it’s important to maximise your pension and tax allowances.
Tip: If you’ve stopped working to raise children, don’t fall into the trap of thinking you can’t continue to save into your pension. My clients are often surprised when I tell them they’re missing a trick here.
Provided you’re a UK resident and under age 75, you can still save into a pension and get tax relief, giving an added boost to your pension savings, from the government. If you’re earning less than £3,600 or are a non-earner, you can still pay in up to £2,880 into a pension each tax year and the government will automatically add £720 (20% tax relief on top), putting £3,600 into your pension savings. It might not sound a lot, but it all adds up over time and will give you a greater chance of the retirement you want.
Money in a pension is usually accessible from age 55 (rising to 57 in 2028).
Tip: Don’t neglect any old workplace pensions. Consolidating them into one easy-to-use account is a good way to take control of your pension savings. It could also give you a better overview of your future retirement funds.
Before you transfer, check you won't lose valuable guarantees or benefits or have to pay excessive exit fees.
Tip: Prioritise retirement savings by contributing regularly to pension plans or individual saving accounts (ISAs). Take advantage of employer-sponsored retirement plans if available. For example, if your employer offers matched contributions, make sure you opt for this before paying into a private or personal pension.
You could also consider speaking to a financial advisor to make sure that you’re on track for the retirement you might need or want.
Giving the children a head start
I’m often asked when to start saving for children in case they go to university, take a gap year to travel, need help with driving lessons and buying car or even to get on the property ladder.
However you want to help the children in your life, it’s important to plan ahead. Working with a financial adviser could give you reassurance, and they can help you create an affordable plan for when the knocking starts at the ‘bank of’ Mum and Dad (or Gran and Grandad).
Tip: The earlier you start saving, the better. Regular amounts that won’t break the bank are a far more achievable way of squirrelling money away than trying to release a large sum of money in the future.
Even saving small amounts regularly can grow into significant amounts by the time your children need it. We’d never recommend investing money that you know will be needed in the next 5 years. So I’d suggest starting to save and invest before your child reaches their teens if you can.
Tip: Using your children’s tax reliefs and allowances can help lower your tax bill and keep more of your money for the family’s benefit. Like your own ISA allowance, a children’s Junior ISA allowance is ‘use it or lose it’. You can also contribute to a child’s pension. With an ISA the child can access the savings from age 18 and with a pension its currently age 55 (which will likely rise before the child reaches retirement).
Estate planning essentials
Protecting your assets and ensuring your wishes are carried out requires proactive estate planning. Moving money out of your estate by paying into pensions or making financial gifts could reduce or eliminate your inheritance tax bill, preserving more wealth for your family.
Talking your options through with a financial adviser and consulting with a solicitor can help you to navigate the legal complexities and create a plan to ensure your legacy is preserved according to your wishes.
Tip: Draft a will to outline how your assets should be spread and select guardians for minor children if necessary. Consider starting trusts to provide for dependents and minimise tax liabilities. And consider if you’d benefit from a Lasting Power of Attorney to let those close to you make decisions on your behalf, in the event you can’t make them yourself.
Tip: Review and update your estate plan regularly, especially following major life events such as marriage, divorce, or the birth of grandchildren.
Caring for yourself
Recognise the importance of self-care amidst the demands of caregiving. Prioritise your physical and emotional well-being by seeking support from family members, friends, or professionals. Remember, taking care of yourself enables you to better care for others and maintain your financial resilience in the long run.
Tip: You’re not alone. Explore community resources and support groups for caregivers to connect with others facing similar challenges and gain valuable insights and advice.
Tip: I’m pleased to say many of my clients tell me that having a financial adviser has helped to alleviate stress and provide peace of mind where their finances are concerned, helping them better care for themselves.
Book a call with our advisory team
If you think you could benefit from getting expert financial advice from a professional like Didi, contact our advisory team today.
You won’t get personal advice on the call, but they’ll talk you through the advice service we offer, including charges and connect you with an adviser if appropriate.
