Feast or famine
Most salaried workers have their wages taxed automatically. Many of the women in this industry are freelancers or small company owners who say they often struggle with tax as their income is inconsistent. One year can look completely different from another and money can come from several sources. Some of the women expressed difficulty in planning beyond the next month and felt like they had to constantly switch gear when it came to spending between good and bad periods.
A smart, long-term plan can help smooth out these problems and reduce some of this pressure, increasing the amount of time available to focus on the things that matter. Working with an adviser who provides cash flow modelling can help creatives visualise income in the short and long term and provide incentives to budget for expenses as well as treats.
Tax can be a minefield. Many of the women admitted to leaving their tax returns to the last minute and ending up with an unexpected tax bill they had to find money for. Working with a good accountant makes a big difference in this scenario and the costs can often be mitigated by the tax savings found.
Planning for the future — good and bad
It is one thing to plan for future events we look forward to — holidays, children and for some retirement — but it is also important to think about whether finances have the flexibility to be supportive during unexpected times of hardship.
Women can often find that caring roles within the family fall to them. Many said they had taken planned breaks for children, but others told of unexpectedly becoming carers for elderly parents and having to try to untangle their parents’ finances.
Cash flow planning cannot prevent this, but it can help women in this position to prepare for a number of scenarios and ensure financial security when the unexpected happens. Weatherbys Senior Tax Adviser Clare Munro said sorting parental finances was a common problem for the “sandwich generation” that encourages us all to simplify our finances and make things easier for our own children.
Planning for retirement was also discussed. Several said that when they are focused on building a career and concerned about where money will come from in the next few months, it can be really hard to look decades into the future and think about saving for retirement.
The most important advice for those in this line of work is to make sure that they are paying NI so that they are on track to get the full state pension and, wherever possible, to buy back incomplete years to fill gaps. Bumper years can be an opportunity to pay into a Self-Invested Personal Pension (SIPP), which can be very tax effective.
Weatherbys Paraplanner Alice Richardson highlighted that cash flow modelling can also be a valuable part of pension planning, showing what the future could look like and whether everything is on track to meet retirement goals.
Keeping up to date
Some shared not feeling like their approach to finance had grown alongside their careers. They said they struggled to move beyond the mindset from their twenties of needing to have access to all of their money all of the time, with making savings or putting something into a pension feeling more daunting.
Weatherbys Private Banker Renae Maroney encouraged the attendees to create a financial review process that has the flexibility to shift as priorities and circumstances change. An adviser can help build confidence to invest appropriately and benefit from the effect of compounding.
The importance of a network
Key figures from WFTV highlighted that they had only begun to engage with their finances and learn how to manage them after speaking with other women in similar positions and hearing their struggles and solutions.
For women in particular, having a network is vital for confidence and potentially identifying good advisers who understand the space. It can also help to learn from others’ successes and mistakes. Dealing with financial affairs is not something anyone should expect to have to do alone.
In her final remarks, Weatherbys Senior Private Banker Shirley Coe summarised that the key is to plan, to not be scared to start somewhere — however small — and to be flexible if life and circumstances change. Talking to a good adviser can be the key to making a start and building confidence and self-reliance.