As a woman, how can I achieve financial freedom?

Q. As a woman, how can I achieve financial freedom?

As a woman, I value my financial freedom as it allows me to live life on my terms. Not only do I have complete autonomy over my big life decisions, including where I live and the amount of money I save, I can also enjoy the little things - from a flat white in my local coffee shop to a bouquet of fresh flowers.

This a great question because I believe financial freedom has never been more important for women. Inflation and higher for longer interest rates have put our money under pressure in the last couple of years. Factor in the fact that women live longer in retirement but accumulate less lifetime wealth, and are more likely to experience career interruptions, including unpaid caregiving, and lower career growth opportunities, we must think strategically when it comes to our money.¹

Here are 5 tips to help you achieve financial freedom:

1. Take care of your debt

Debt can get expensive, so it makes sense to tackle this first. You may have credit cards and/or personal loans and often, these come part and parcel with high interest which can really cost you in the long run.

If you can, make it a priority to pay off your full credit card balance each month. If this isn’t viable right now, ensure you pay more than the minimum payment each month as this will allow you to clear your debt far quicker. It’s also worth keeping note of when your payments are due, as overdue payments can have a negative impact on your credit score.

• To stay organised, I like to put any credit card repayment dates in my phone calendar.

2. Contribute to an emergency fund

Life comes with surprises. Sometimes it’s good, sometimes it's not so good. Maybe the boiler packs in, the car breaks down, or you lose your phone. In situations like this, it’s worth having an emergency fund.

One way to save for an emergency fund is to open an easy-access savings account. This way, you can withdraw the money with ease.

But how much money do you save? Well, a popular rule of thumb is to have about three to six months’ worth of your usual salary saved.

If you have less worry not, you can increase the size of your pot through regular saving. Don't forget that you can contribute one off payments to your emergency fund, for example, if you’ve received some birthday money, or you receive a bonus from work. So, if life throws you a curveball, you're well prepared.

• I set up a regular direct debit to plump up my emergency fund.

3. Budgeting is your best friend

Creating a budget requires some time and energy but overall it's an excellent way to meet your financial goals. It also helps you understand your spending habits.

It's worth looking through your bank statements to see where your money is going. This way, you can keep an eye on your regular expenditures, be conscious of any impulsive purchases and see how much you’re saving and/or investing. You may also notice some unnecessary subscriptions.

• Since I am a visual person, each time I get paid, I split my money into different accounts. I have one account dedicated to food and travel and another for bills, savings, and investments.

4. Remember to save and invest

It's helpful to set aside a portion of your salary each month for savings and investments. If you automate this and set up a regular direct debit, it may prevent you from spending this money elsewhere.

There are a variety of ways you can save. You can set up a savings account with your local bank or building society.

If you're looking to save in a tax-efficient way, a Fidelity stocks and shares ISA may be worth considering. You can save up to £20,000 each tax year.

New to investing and looking for some ideas? Here are a few options to get you started:

• Navigator tool - simply answer 3 questions and see what funds meet your investment objectives.
• Select 50 - this is a list of funds chosen by experts. There are a variety of different asset classes and geographical regions available.
• Investment finder - Browse all the investments available on the Fidelity website. Take advantage of our many filters.

We also regularly publish articles on this topic which you can check out here.

• I don't check the performance of my stocks and shares ISA too often, once a week at most. This prevents me from making any rash decisions.

5. Don't neglect your pension

A pension is one of the most important long-term savings vehicles available. Whether retirement is just around the corner, or you’ve got a couple of decades ahead of you, it's important to contribute to your pension regularly.

We've written an essential guide for saving for retirement which you download and read here. You can learn more about how much you need to save for retirement and find out if you're on top of your pension savings.

Since women on average are expected to live for longer, you may want to save even more. Find out if you’re on track to meet your retirement goals with this handy MyPlan tool.

• I regularly contribute to my pension each month, but I also like to make one-off payments each year. This has given my pot a nice boost.

Got a burning question you want to ask? Why not drop us a line. Click here to ask an expert your question.

Source:

¹ World Economic Forum, 9 April 2024

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). Select 50 is not a personal recommendation to buy or sell a fund. Navigator is not a personal recommendation in respect of a particular investment. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.