Women must plan for their future

Published on Friday 7 March 2008 20:50

1 PERSONAL DEBT Minimise any personal debt before or at the same time as saving. There is no point in saving into a bank account earning, say, 5 per cent gross (4 per cent net after tax) when paying 16.9 per cent APR or so on a credit card. Also, don't overspend as it can take a long time to pay back bank loans and credit cards – if you've not got the cash, then think hard before borrowing.

2 SAVINGS Maximise savings by using a tax-efficient savings vehicle, such as an individual savings account (Isa). A mini cash Isa allows up to 3,000 to be invested each year, whereas a maxi Isa will allow up to 7,000 to be invested into stocks and shares (7,200 from April).

3 CALCULATE Know what you and your husband have. Many women have no idea what assets and liabilities they have if they separate. Take copies of documentation and keep it in a safe place. If you know what there is and in whose name it is, lawyers can easily deal with things, including tax matters. If they don't find out about assets until too late you may have to pay tax that could otherwise have been avoided.

4 PENSIONS Review pension provision as many women rely on their husband's pension for income in retirement. If a separation or divorce occurs then you may be left high and dry , leaving a potential shortfall on reaching retirement. A little-known, and little-used, facility if you divorce is for you to elect to "take" your husband's national insurance record rather than your own (without it affecting his entitlement) which can significantly increase your own state pension. Your family lawyer can advise you on this and how to find out if you should make this election.

5 PROTECTION Make sure that income is protected in the event of death, illness or redundancy by investing in a suitable plan to provide an alternative income should such an event occur.

6 PLAN AHEAD Make a will and plan who will be the guardian to the children if parents are not around. It's also worth putting assets and other valuables into a will, as it legally states who is entitled to your estate and assets when you die.

7 CHILDREN Invest children's child benefit into pension to give them a start on pension if this is affordable. Up to 3,600 can be invested into a pension plan each year. If the maximum allowance was invested into a pension from birth until the child's 18th birthday, assuming an investment growth of 6 per cent per annum, the size of the fund would reach 117,935. Because these pension contributions attract tax relief, parents need only invest 2,808 to get the full contribution of 3,600 including basic-rate tax relief.

8 ORGANISE Organise money… have a bills account for paying regular direct debits etc and an account for spending money and don't sway from their agreement with yourself. If it is affordable, have a separate savings account and pay in a regular amount each month and treat it like a bill.

9 EDUCATE One for the future… start to educate your children and encourage a savings mentality. We're at risk of becoming a nation getting further into debt, so it makes sense to teach children the value of money.

10 ADVICE Obtain the services of a good IFA who will help keep you on track. Female IFAs can be tracked down if preferred.