Becoming a Financially Independent Woman | Best Financial Advice
Is it really possible? Becoming a financially independent woman, when women around the world is only making 70% of what an average man makes?
Not only is this statistic shocking, it is expected to take 216 years to close that gap (even more shocking!)
I think we can all agree that it is not good enough. And this is just one aspect (out of many) that is holding us back from any sort of financial independence. Read on as I write about top 5 shocking obstacles that women are facing everyday, and how best to overcome them.
5 Obstacles in becoming a financially independent woman
Do you know we are getting ripped off while shopping? Not only are we paid less, we actually pay more (+37%!) when it comes to buying everyday products. Few years ago, a study by TIMES found that shampoo, conditioner, shower gel and bath products targeting women carry higher prices. Common items like razor or a pen that are of the colour pink (basically targeted at women), is made to be much more expensive. This is known as the PINK Tax. Most women already buy things that men don’t have to buy, like cosmetics and hair products – which carry higher luxury taxes on them anyway. So yes – we are getting hammered both ways.
In the UK and USA women makes only 80% of what an average man makes. So for every £1 a man earns, women are making £0.8. While the pay gap is not same as pay inequality (which was made illegal 50 years ago in the UK), the gap is still very unfortunate. The data highlights that there is something going on that requires our attention.
Apparently, women are simply not interested in investing money. The statistics are horrifying. Only 4.4% of millennial women in the UK have an investment product. From an early age, a lot of us were rightly taught about how to budget and save money. Those teachings were great, except there is more to money than just saving and budgeting. Money needs not only be saved, it needs to grow. In a study, 37% male stated their financial education was focused on wealth-building and growing, not just saving. Another survey found that only 26% of millennial women felt that they have a high level of financial engagement, compared with 55% of men. This is huge. If we do not even have the curiosity to learn and grow – we are only going to be holding ourselves back from becoming a financially independent woman. So this is problem that we must tackle.
There are times when we just have to take a break. Multiple reasons could be behind this, such as: family situation, health, stress and kids. While this is completely a personal choice, women are mainly impacted by this than men. And unfortunately, corporates do not like to see a prolonged break in our career (which is a shame but is improving with time). PwC’s November 2016 study found that 65% of returning professional women work below their potential salary level or level of seniority. I share tips and advice on how to tackle this issue in the next section.
This point relates very well to the last point about career. This issue is all about our mindset. Lack of confidence is something that is present in almost all of us. But, there are scientific and practical evidence to show that women are less self-assured than men—and that, in order to succeed, confidence matters as much as competence.
Lets just that sink it.
Why not watch the YouTube video below about becoming a financially independent woman
Solution to our #1 OBSTACLE in becoming a financially independent woman
Be mindful of what you are buying. Do we really need a colour to define our gender? Is the price higher because it is pink? Is the price higher because it is packaged well? I would personally go further and think about the type of products that we sometimes purchase. In my south Asian culture, there are products like skin brightening cream that are aimed at women. It is shaming to admit, but colourism still exists in our society. So it is time to take a hard look at some of our own spending habits and what is it that we are really trying to achieve with it.
Solution to our #2 OBSTACLE in becoming a financially independent woman
Why does the pay gap exist? Why are we not asking for promotions and why are we not targeting for those high paying roles. The industry I work in is very male dominated, there are time when I am in meeting room full of male, mostly white and middle aged. While it can feel strange at times but I am still here, getting my voice hear and encouraging other women to join our industry. It is not only about working in a high paying industry, what is more important is that you are not getting paid less than your male colleagues for doing a similar job. If you are in the UK and work for a company with more than 250 people, then by law the company has to release their gender pay gap report every year. Look at your company report here. Study the numbers to see if it has improved over time. Feel free to email HR asking about what is happening with the company and what action they are taking in reducing gender pay gap. The only way we can ever make a change is by having our voices heard.
Can we discuss salary?
Although talking about salary figure is a ‘no-no’ is most places, but sometimes it is helpful to discuss it with a colleague who you are comfortable with. If that is not possible, then another good resource at your disposal are the recruiters. Generally they are terrible at getting you a job, but many of them conduct really good market research around expected salary by role and years of experience. If you feel you are not at par, then ask your boss during appraisal meeting for a raise. If you don’t ask you don’t get. Research highlights that 67% of male feel confident in asking for a pay raise, compared to less than 40%. And, it really does not matter how hard we work, no one is going to come and give us a raise automatically. That’s just the way it is. And there is no way we can reach income equality if we don’t do this for ourselves.
Solution to our #3 OBSTACLE in becoming a financially independent woman
This is the easiest one to start working on. Starting to invest does not require thousands of dollar or pound, we can start with as little as £25. Investing for our future is extremely important. This is the only real way of becoming a financially independent woman. As we start to live longer, we will be expected to work for longer or pay for our retirement for longer. Our retirement age is expected to increase to 75 in 15 years’ time in the UK. While there is state pension, the UK provides the lowest state pension in the developed world, accounting for only a 16% of the income made during our final year of work. Therefore, this is a MUST that we start to invest for our future so that we are not forced to live in poverty.
What Actions to take?
Check if you are contributing towards a pension. If you have employer pension, max it out. If you work for yourself, open private pension account [SIPP]. After making sure you are saving enough towards pension, open an investment account. For example, I have an account with Trading 212. In UK, we have a great system through ISA, where every year we can invest £20k tax free. There are so many platforms to start investing in, you can watch my introductory video on stock investing.
Once you open an account, set up simple investing plan. For example, on 1st working day of every month, I have an automated direct debit linked to my ISA account. 10% of my net pay gets automatically invested in a Mutual Fund of my choice.
Solution to our #4 OBSTACLE in becoming a financially independent woman
Hats of to all the women who takes time off to look after their families because that in itself is a full time job – except you don’t get paid. I have full respect to all the mothers out there like my own who works 24/7 without expecting anything in return. From my south Asian background, some of our female family members never had the opportunity to focus on their career. This is because they chose to either sacrifice it for their children or found happiness in being a homemaker. Either way it was their way of investing, they invested their time and life. However our society is changing and shifting. Now many of us are settled to do both. So, if you are someone, who have decided to take a step back from your career here are few things you may decide to do as a side hustle:
- Start a blog about a topic you are passionate about (like this one, I am passionate about all things finance)
- Skill up through learning to code (very hot and demanding skill to have right now)
- Write a book
- Start a business from home
- Learn to invest and create a passive income portfolio (you may choose to subscribe to my blog or YouTube channel where I talk about these topics)
Solution to our #5 OBSTACLE in becoming a financially independent woman
Believe me when I say this: you are no less than anyone out there. If there is an opportunity at work, put your hands up. Even if you don’t know most of what will be required of you, still put your hand up and learn it on the job. Strong, independent women can hear a lot of name calling like “feisty” or “bossy” while trying to become a financially independent woman – if you hear it CALL IT OUT. Take it up to HR. Don’t let people get away with it. Most importantly, don’t let that ruin your confidence.
From time to time, I personally suffer from imposter syndrome, which is OK – but I always keep pushing myself harder to get through that. Here is what I do when I want to boost my confidence, it is called the mirror technique. Basically I talk to myself in front of the mirror. Start by doing this once a day. Stand front of the mirror and say these 3 good things:
- Your good quality: e.g. “I am kind”. “I only want the best for people”
- Positive things about today or tomorrow: e.g. “I will open an invest account today.” or “I will apply for that managerial role tomorrow”
- Confidence affirmations like: e.g. “I trust myself.” and “I am confident of what life has planned for me.”
Slowly but surely, these will really boost your confidence.
The TRUTH is...
Until we have financial equality, we will never have TRUE equality. And that is an ideal place to be in for both male and female. Its not us vs them. It is for all of us.
