Saving for your own future
The unpalatable truth about saving for the future is that women don't do enough of it. And to make matters worse, women tend to be less good than men at sorting out their pensions: the average woman retires on more than £7,000 less per year than the average man, and three in 10 women over 40 say they're relying on their partner's pension for a retirement income.
The trouble with relying on your husband's pension is that men's pensions often don't provide very well for partners and divorce can change your financial situation considerably, and around half of all marriages end in divorce.
So why are we getting it so wrong? Well - surprise, surprise - it's all down to us being mothers. We're much, much more likely than our menfolk to take time out of paid work while our children are young, or to do 'casual' or freelance jobs that don't give us a pension.
And we're very, very likely to want to use all the money we earn on our children, and ignore our family's long-term needs in favour of the needs we see right under our noses (like a new pair of shoes for child number one, or a new iPod for child number two).
"I think if there's anything left at all at the end of the month then not saving it is a very short-sighted way to live. We have the best part of a year's salary each saved for the proverbial rainy day and other investment-type decisions (renovations etc). But I have friends who literally live hand-to-mouth each week and have nearly as much debt as we have savings." sparkle12mar08
So are we right to prioritise our children's immediate needs, or should we be saving more? Most financial experts say women would do better in the long run to save more and to think more about their individual, long-term futures (ie to get our own pensions).
If we secure our own futures, we're effectively protecting our children's future as well as our own because they won't have to worry about us, or even provide for us, when we're elderly.
"The younger you are the more I'd shove into a pension. As I get older I'll stop increasing contributions and build up ISAs so I've got a mix. A mix is what you're after - long-term, medium-term and short-term savings; some accessible, some not." LeninGrad
Saving versus paying off the mortgage?
The prevailing wisdom seems to be that it's savvy to concentrate on paying off your mortgage before you get too serious about saving. But that said, it's always important, if you possibly can, to have a contingency fund that you can dip into in case of unforeseen costs.
So yes, concentrate on paying off your mortgage, but make sure you put a small to medium sum into an account where you can access it easily in case of emergencies, such as redundancy or serious illness. As these Mumsnetters explain:
"It makes no financial sense to be making less from savings, whether pension or otherwise, than you are paying out in debt. This includes mortgage payments. If you have spare cash overpay your mortgage first." Foreverastudent
"I have an account into which I have £20 a week slid across by standing order. It banks up surprisingly quickly (I dip into it regularly on occasion) and we also 'underspend' each month which overpays our mortgage. The mortgage will be gone in a few years if I remain being a tightwad prudent. If something bad happened financially, this provides a buffer zone." TattyDevine
An ISA (Individual Savings Account) is a good way of saving because you don't pay any tax on the interest you earn. It's like a box in which you can put your savings and keep it safe from taxation.
There are two types of ISA:
- Cash ISA (you have to be aged 16 or over)
- Stocks and shares ISA (you have to be aged 18 or over)
With a cash ISA, your money is kept in a simple savings account; with a stocks and shares ISA, it's invested in, yes, stocks and shares.
Each person has an annual ISA allowance. The important thing to note is that if you invest money in an ISA and then withdraw it, you can't replace it in the ISA or start a new one in the same tax year.
But you do have the right to transfer an existing cash ISA to another provider to get a better rate. (Martin Lewis, of Moneysavingexpert.com, is your man for the ins and outs of transferring ISAs.)
And, obviously, the longer you leave your money in ISAs (as long as they're paying a good rate), the better.
A pension - like an ISA - is a box, or wrapper, into which your money goes. While your money is there, it's protected from tax (and you get tax relief on your contributions). You can't take your money out of it until you're 55.
There are three main types of pensions:
- Company pension - probably your best option if it's available, because your employer also makes contributions
- Personal pension - allows you to save each month, and the money is invested for you in funds.
- Stakeholder pension - simpler pensions that allow you to make relatively small payments in, but which might have a limited number of investment options
There's also the state pension, of course. The amount you'll get once you reach statutory retirement age depends on how many years of qualifying National Insurance contributions you've made.
Women who have taken time off work to have children, or have worked part-time, should get a state pension forecast, so they've got a realistic picture of the amount they're likely to get.
Thankfully, there are lots of seriously sussed Mumsnetters when it comes to saving for your future, so whether it's ISAs, pensions, stocks, shares or just how to go about finding reliable financial advice, mosey over to Mumsnet Talk and get posting.
Disclaimer: Any content in our family money section is intended as general information only. For specific advice about your personal financial situation, get advice from qualified, independent, regulated professionals.