Master financial fear to avoid being left in the lurch

Most women leave the finances to their spouse due to a lack of confidence, and that can be a big problem down the line if, for whatever reason, there’s a need to take control. 

Taking responsibility for your financial planning is key to securing your aspirations. But a recent survey by UBS Global Wealth Management found that a significant proportion of women prefer to leave the financial planning to their husbands.

The survey found that although around three quarters of women believe financial planning is important, very few are actively engaged with their plans. In the UK, just 15% of UK women share responsibility with their partner for long-term finances such as savings, investments and retirement planning. 

No control

While some of those surveyed by UBS cited a lack of financial confidence as the reason for ducking out of money decisions, an alarming 85% of women said it was because their spouses knew more about financial planning.

Not being involved with the finances comes as no surprise to Sarah Coles, personal finance analyst at Hargreaves Lansdown. “When you’ve lived with someone for years, it’s only natural to gravitate towards the chores you detest least,” she says. “This is fine for jobs such as ironing and cleaning, but if you’ve handed over financial planning, you could be heading for trouble in the long term.”

Unfortunately, 42% of marriages end in divorce according to government figures, and with women living longer on average than men, the probability of being left to manage the finances at some stage is pretty high.

Having to pick up the financial planning can present a number of challenges. For starters, although finance companies have systems in place to help you take over any accounts when a spouse dies, Heidi Allen, head of employee well-being at Neyber, says this assumes some knowledge in the first place. “If you don’t know what you’re dealing with, it can be very difficult to sort out the finances,” she says. “You might miss out on money that is rightfully yours.”

Criminal record

Without control, there’s also the risk that you’ll miss a payment or fail to renew an annual insurance policy. This could even mean you inadvertently break the law if you drive without insurance because you weren’t aware your policy had expired. Similarly, miss the tax return deadline and you’ll face a £100 fine plus additional charges if the delay slides beyond 30 days.

What’s more, with so many bills settled automatically by direct debit these days, not knowing when these payments are likely to be taken can make it difficult to budget. This could leave you exposed to overdraft charges.

A lack of financial knowledge also means you’re unlikely to access the best deals for your money. This could take various forms, from something as simple as leaving your savings in an account paying interest at 0.2% or less, to unintentionally derailing an investment strategy. “Suddenly finding yourself running a £500,000 investment portfolio can be overwhelming,” says Rose St Louis, head of strategic partnerships at Zurich. “This could mean it’s moved into cash or, worse, targeted by scammers.”

Disappointment

Commonly promoted scams include exotic investment schemes with equally exotic returns; free pension reviews that often require you to transfer your money; and urgent requests to move your savings to a ‘safe’ account. “It’s only when you know a bit more about your finances that you recognise these are classic scams,” adds Coles. “If something sounds too good to be true, it probably is.”

Even if you don’t wind up having to look after the finances single-handedly, failing to actively engage with them can bring disappointment. “Without communications about your financial goals, there is the potential for disappointed expectations and fractured relationships,” says family wealth mentor Diana Chambers. “If you don’t have a plan, you’re unlikely to arrive at your financial destination.”

This may become a particular issue around and after retirement. If the pension is in the spouse’s name, although you may get a share on death or divorce, it might not live up to expectations. “A defined benefit pension might only have a 50% spouse’s pension,” says Heather Owen, financial planner at Quilter Private Client Advisers. “This can be quite a drop if you’re used to living on the full pension.”

Taking control

Turning this around can seem daunting, but it’s possible to transform your financial skills with some very simple exercises. As a bare minimum, it’s prudent to know what you’ve got and where it is.

Allen found this out in 2015, when her husband was diagnosed with leukaemia and had to spend six months in hospital. “We’d always had a spreadsheet of all the household finances, listing every policy, outgoing and income we had with all the relevant details,” she explains. “Having this meant I didn’t add money worries to the stresses at the time.” 

As well as day-to-day finances, it’s also prudent to get involved with the longer-term financial planning. Owen recommends talking about your goals and aspirations, rather than focusing on the minutiae. “It can seem like a huge task if you’ve never done it before,” she says. “Starting with a conversation about a goal such as helping the kids with mortgage deposits or supporting the grandchildren through university can make it much easier then to break the goal down into tasks.”

Pension planning is a good example of this. Rather than start with that as a rather blunt objective, focus on what you would like to do in retirement and how much money you’d need to finance this lifestyle. Then you can work backwards from that, taking steps such as topping up your workplace pension and making sure you’re on track for the full state pension in order to reach your retirement goal.

Financial education

There are plenty of resources to help you learn more about finances. As well as magazines including Money Observer and Moneywise, government websites such as the Money Advice Service, the Pensions Advisory Service and Pension Wise can help you learn more about personal finance.

With a bit of knowledge, Jim Adams, head of research at Boring Money, says it’s then worth experimenting. As an example, he points to investments. “One of the best ways to learn about investing is to do it yourself,” he says. “Start with a small amount of money that you can afford to lose and you will quickly learn how it works and the types of things to look for. I guarantee you will have dealt with much more boring things.”

It can also be worth bringing in professional advisers. If your partner already uses a financial adviser, St Louis recommends going along to any meetings with them. “If they’re looking at plans that will affect both of you, it makes sense to go along,” she says. “Don’t be afraid to ask questions: a good adviser will be more than happy to help.”

But, whether you’re 25 years old and you don’t know which funds to pick for your pension, or you’re 75 and wondering whether you can afford to give your kids an early inheritance, it’s never too late to engage with your financial planning. Building your knowledge and getting to grips with your personal finances will give you the ability to achieve your financial goals and aspirations.

What to do if you find yourself left in the financial lurch

Life expectancy statistics mean that every year, thousands of women find themselves widowed. While this can be a difficult time for anyone, for those who haven’t got involved with the household finances, it may be even trickier.

Asking for help is the first step to taking control. “Family or friends can help with everything from shopping around for insurance to sorting your savings,” says Sarah Coles, personal finance analyst at Hargreaves Lansdown.

If there’s no one you can turn to, speak to a body such as Citizen’s Advice or Age UK. As an example, Age UK has an advice line – 0800 678 1602 – which is open 365 days a year to deal with any questions, including those relating to your finances.

It’s sensible to gather together any relevant paperwork. Looking through bank statements can help to identify direct debits for various insurance policies, pensions and investments, which can all be tracked down.

Speaking to an independent financial adviser may be worth considering. Heather Owen, financial planner at Quilter, says it’s not uncommon to be called to a bereaved person’s home and find them surrounded by paperwork. “Turning to an expert can help it make sense and ensure you receive everything you’re entitled to and don’t miss any payments,” she adds.

It’s also important not to be rushed into any decisions. Coles recommends waiting for six months or so before doing anything major. “Bereavement may not put you in the right frame of mind for any big decisions,” she says. “If you can wait until the initial shock dims, you will be able to think more clearly about the future.”

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