More and more women are earning and owning more wealth than ever before – in fact there are now more women millionaires under the age of 44 than men!  However, having this wealth has not necessarily translated in to greater happiness or a more balanced life for many of us. 

Why? There are many reasons – we don’t have the time, the financial world is full of content designed to create more confusion than solve and finally not many of us find money management that exciting!

So what can you do? Well the good news is that there is help at hand - Addidi has been created specifically to help you focus on what you enjoy doing and what you do best. The rest you can delegate to us – we will deal with your financial post, liaise with your advisers and service providers and sort out your To Do lists.

However if you are not an Addidi member, here is a simple guide as to where to start.

The first thing to remember is that financial planning is not just about investments or products. It covers the whole spectrum, from spending and borrowing to insurance and tax and even what happens to your money after you die.  It is the way to provide a roof over your head and food in your fridge, clothes to wear and holidays to enjoy.  It means planning for the future and for the unexpected.

Step 1 – the here and now

The first step is to ‘know your bottom line’.  You won’t achieve anything if you bury your head in the sand and you’ll probably find that your money situation isn’t as bad as you think when you do put it under the microscope.

Start with the foundations – make sure you can pay your way, week by week, by budgeting, i.e. balancing your income against your outgoings (there are plenty of budget planners available online; otherwise you can obtain one from Addidi – just email us on didi@addidi.com).
 
Provided your income exceeds your expenses you can start to think about what to do with your spare money.  Have a good time by all means but also put money aside for whatever life may unexpectedly throw at you.  This could be the sudden opportunity to take a far flung holiday or it may be a leaking roof.

Once you’ve done the budgeting exercise you should complete an inventory of all your assets (a net worth statement) – if your finances are in a good state, then this will make you feel even better – its good to see what you are financially worth on a piece of paper. 

If you your finances are not in good shape then it will become blindly obvious and hopefully help you to focus and get back on track. The statement should include a list of any insurance policies you have which would pay out if you or your partner died.  You need to know exactly what you have – and what you owe – before you can make any decisions about the longer term.  Your partner should do the same.  This will not only help you plan but make it easier if anything happens to you and someone needs to sort out your affairs.

Step 2 – look forward

Now that you know where you stand financially, you can think about :

• short-term planning - this is what I call money management and is about making sure you are paying as little as possible for your mortgage, utilities; earning a decent rate on your savings, as well as making sure you have sufficient resources for the unexpected (sickness, emergency repairs and so on). As a rough rule of thumb, I would suggest you aim to have about 3-6 months worth of expenditure in cash as an emergency fund. I would also suggest you look at some life insurance to fill any short term gaps in your financial security – income protection in cash you are unable to work, life cover to pay off any mortgage and loans if you have dependants. I call this my security blanket and it gives me peace of mind knowing I have taken care of the unexpected.
• long-term plans – this is looking towards your retirement. I would strongly urge you to take some time out to dream about your ideal retirement or that holiday home you would like to buy! Pensions are necessary but not that exciting if you are in your thirties – however having a goal to save for will make it more real and more motivating. I would strongly urge everyone to make an early start – the younger you start saving, the less you need to save as a percentage of your earnings – as a minimum you should look at about 10-120% of your earnings going towards your retirement.
• Planning for the medium term.  I call this is the nice to have – that sports car you dream of driving, or that once in a life time holiday or perhaps school fees for your children. Whatever is once your short term and long term needs are taken care of, you can make a start on this.  

Finally, don’t assume that once you have given yourself a financial overhaul you can forget about your finances for another decade. Your circumstances will change over the years, as will the financial world, and you must remember to update your financial planning at regular intervals.

Anna Sofat, Founder Addidi Ltd. She can be contacted at didi@addidi.com or 0207 060 0700.