Your Best Friend's Guide to Cash: Eight things every woman needs to know about money

Your Best Friend’s Guide to Cash

Eight things every woman needs to know about money

Kara Gammell

For Dr Audrey MacNevin, the professor who said I should. To my family, Brenda, Frank and Lisa Gammell who said I ‘could’, and to my husband Gareth who helped me actually achieve it.

Contents

About the author

Introduction

Chapter 1: Starting at Home

Step 1: Check out your budget

Step 2: Get your house in order

How to get the most from price comparison websites

Chapter 2: Savvy Spending

Food shopping

How to save money on meals out

How to save on fashion

Savvy shoppers know when to spend

Earn money while online shopping

Daily deals sites

Haggling

Cut back on car costs

Chapter 3: Debt

Step 1: Survey the damage

Step 2: Ask for help

Step 3: Decide what to pay off first

Chapter 4: Saving

Step 1: Set a goal – and stick to it

Step 2: Prepare for an emergency

Step 3: Give yourself a savings payday

Step 4: Keep your goals separate

Step 5: Keep an eye on the prize

Step 6: Watch out for falling rates

Chapter 5: Getting on the Property Ladder

Getting the cash together

Mortgage questions and tips

Mortgage overpayments: why paying more means you spend less

How sellers can boost value

Chapter 6: Having a Family – and Paying for it

Getting started

Shopping for baby

Maternity pay and your rights

How am I meant to go to work with childcare cost being extortionate?

The average cost of childcare has increased by a fifth in the past year and as a result, many parents are asking themselves – does it actually pay to go to work?

Ways to cut costs

Now you’re a parent, what financial decisions do you need to make?

If there’s a will, there’s a way (at least legally)

Savings for the kids

How to stop fighting about money

Getting married and pre-nups

Dealing with divorce

Chapter 7: At Work

Affects on career from childcare

Asking for a pay rise

How to ask for flexible working

Redundancy

Chapter 8: Planning for the Future

The scary stuff

Investments

Epilogue

Acknowledgements

Publishing details

About the author

Kara Gammell is an award-winning financial journalist. She has written regularly for a number of national newspapers, magazines and websites, including The Daily Telegraph, The Sunday Telegraph, The Guardian and The Observer.

Born and raised in Nova Scotia, Canada, Kara lives in West Sussex with her husband, young daughter and two elderly rescue cats.

Visit her online at karagammell.com or follow her on Twitter @KaraGammell.

Photograph by Jillian Kennedy (jilliankennedy.com)

Introduction

Light at the end of the tunnel

If you are in your 20s or 30s, I hate to be the bearer of bad news, but – at least financially speaking – things aren’t going to be easy.

For most of us, our biggest dilemma back in the good ole student days was whether to spend our taxi fare on another round of drinks. But once you hit the ‘real’ world, when it comes to cash, trust me, things get a lot more serious. But don’t panic. I have a plan that can tackle it all.

Kids, of course, are the reason that most people struggle with money at this age. The average age of women giving birth is now nearly 30 and figures from insurer LV show that it costs about £11,000 to raise a child for the first 12 months. Though it sounds hard to believe, between nappies and nursery, car seats and clothing, our little darlings burn through our cash before they can even crawl.

What’s more, this means that parents are now estimated to be spending on average nearly a third of their annual income on bringing up their child each year. For single-parent families this figure rises to more than half of their annual income. Now there’s an effective form of birth control if I ever saw one.

It’s childcare that will be the biggest drain on your finances, but even if you save on these bills because one parent stays home, you have to get by on one income instead of two. And this doesn’t even seem like a viable option these days; figures from Aviva show that the number of stay-at-home mothers is at its lowest level since records began in 1993 – most likely due to the rising cost of living and increasing house prices. All you have to do is look at your friends with kids – how many stay-at-home parents do you see? None? One? That’s what I thought. These days, most families need two people bringing home the bacon, and as your toddler is too young for a paper route, it looks like its up to the grown ups.

When it comes to parenthood, I can honestly say that we would rather have our precious baby than bucket-loads of cash. And there really are ways to soften the financial blow. Chapter 2: Savvy Spending has some top tips (if I do say so myself) on how to go about doing just that.

Of course, not only are we grown ups expected to raise a family, we are also expected to buy a house. And to make matters worse, most personal finance books preach about the long list of other ‘must-dos’: build a successful career, put away cash for your kids’ education, pay off your student loan, escape credit card debt. Oh, and don’t forget ploughing serious money into your pension so you don’t spend your retirement living like a pauper. The fact is, due to high living costs even two people with an above-average income can’t accomplish all these goals simultaneously.

But before you panic and put down this book – relax. It is not all doom and gloom. Yes, it can sound a bit depressing when you look at the figures. Even I think the idea of doing all that is unnerving to say the least – and I’m paid to write about money for goodness’ sake.

This book will not tell you to try to do it all at once. Rome wasn’t built in a day, and neither will the mountain of money or the freaking awesome financial plan you are after.

My idea is that a little bit here and there is better than nothing. I will tell you everything you ‘should’ be doing, and if you do what you can (which is more than you are doing now) you are off to a good start.

And things are only going to get better. There really is light at the end of the tunnel. Industry experts assure me that while your 20s and 30s can be the most stressful financial period of your life, by the time you hit your mid-40s it is typically smooth sailing. You make more money, your kids no longer require costly childcare and your mortgage is dwindling – you will hit what I like to call the ‘financial sweet spot’. And I have to say, from where I’m sitting – as a 35-year-old, self-employed, married woman with a toddler – it can’t come soon enough.

So let’s get started on taming the financial turmoil.

First things first, let’s get the negative news out of the way. It’s time to figure out what has been going wrong so we can move forward to fix it. Brace yourself, the following paragraphs may give you waves of rage, but as the red mist descends, let that spur you on to take matters into your own hands. You know the saying: ‘Don’t get mad, get even’? Well, the next section is bound to make you want to do just that.

The hidden costs of being a woman

For many women, when it comes to cash, it can seem like everything is stacked against us.

I mean, just look at the fact that it is more than 40 years after the Equal Pay Act of 1970 and we are still getting paid around £5,000 a year LESS(!) than our male counterparts – which not only means we take home less each month, but we are going to have to work longer than men to receive the same type of retirement income. Figures show that a woman will typically reach the height of her earning power at the age of 34, while a man will see his salary continue to grow until the age of 50.

Yet, against the odds, more and more of us are becoming the key financial decision-makers at home. As we modern women focus more on our careers – and a growing number of us nudge our male partners out as the main breadwinner – we have become very much in charge of the purse strings.

We are what a study by the Department for Work and Pensions likes to call the ‘alpha’ partner in the relationship; the ones who carry out the research and instigate financial decisions on everything from booking a holiday to buying the family car and selecting a pension provider.

Men, meanwhile, tend to be the ‘beta’ partners. Although they provide some input into financial decisions, they take what the government study calls a relatively low level of responsibility compared to us women. Ahem.

So even though women are often more financially disadvantaged than men solely because we are female, it is our instinct to stay on top of our finances.

But while we are busy taking care of business, are we really making the most of our hard-earned cash? From what I am hearing from my girlfriends, my guess is no.

I suspect this is down to the fact that there just aren’t enough hours in the day to be awesome at everything. Something’s got to give – and we still need to feed the children, get ourselves to work, try to get to the gym, have some semblance of a social life – and sleep a few hours here and there.

Clare Francis, editor-in-chief at comparison website Moneysupermarket.com, agrees.

Having enough time in the week to work, manage the home, see family and friends, and stay fit and healthy is hard enough, never mind having the time to assess your finances, she says.

Many busy women will push sorting out their ‘money matters’ to the end of their to-do list month after month, yet it is often one of our biggest worries – how can we afford to pay for everything we need, and want?

This inertia is costing us dearly. If we don’t actively chase the best deals on everything from bank accounts to buying groceries (not to mention holidays and household bills), we will find ourselves spending more, but getting less.

Drop the ball even for a second and we find ourselves out of pocket.

So, we ladies have to be on our toes to ensure we are not paying over the odds.

Money may not buy you happiness, but it can certainly make you more comfortable. In fact, if you ask me, it can buy you the things that can make you happy – whether it is a roof over your head, food on the table or a pair of shoes on your feet.

And I should know. When I first came to the UK from my home country Canada at 23, financially, I was a disaster.

After five years of fun at uni (where I had a great time – probably too great in hindsight) I closed my eyes and stuck a pin in a map of the world and landed on Brighton. It was bad enough that I wound up with a minimum wage job, but it came as a real shock to be paid just once a month! When I lived on the other side of the pond I was always paid fortnightly.

I had no idea what an overdraft was (or why the cashpoint swallowed my Visa) and was so skint I actually had to use shower gel as (gasp!) shampoo.

After living the good life with my parents’ financial help and student loans at Uni, reality hit me like a slap in the face.

Then I went to journalism school – just my luck, I wasn’t eligible for student loans in either country. Once during my work experience in London I was so broke I actually cashed in my Oyster card. For £2. Yep. It wasn’t good. It wasn’t good at all.

But, eventually, I’d had enough – and so had my now-husband, who had grown tired of bailing me out. I took control of my money and turned my cash crisis around. By the age of 28, I’d become an award-winning financial journalist at The Daily Telegraph and a homeowner (independent of the bank of mum and dad, too) – but most importantly, I was no longer living life on the brink of a financial disaster.

Luckily for you, getting your finances fighting fit needn’t be the labour-intensive hassle you might expect. What’s more, it doesn’t even have to ruin one of your precious – and well-deserved – weekends.

I will share my tried-and-tested tips for sorting your money out. It’s not even that hard once you know what you are doing.

Before you get too far into this book, let me be upfront when I tell you that the information you find in this book, while as awesome, witty and clever as it might be, is not intended to be your only source of information when you are making financial decisions.

I may be many things – an experienced money journalist and super-fabulous wife/mother/friend just to name a few