REFRAMING HOW WE THINK ABOUT MONEY
Admit it, do you ever flick past our Financially Fabulous features kidding yourself that they’re written for other people and not for you?
Over the years, I’ve met a great many women who consider their own money to be ‘family money’, but the truth is, we all need to look after number one. ‘Many women have a natural tendency to make the children in their lives a financial priority,’ says Moira O’neill, the Financial Times columnist and independent money expert.
As mothers, grandmothers, aunts and godparents, I’m sure we’re all guilty of wanting to give the young people in our lives generous gifts, special treats and opportunities that we never had at their age. But, as strong as the emotional pull can be, it’s vital to get our own finances in order first.
‘Women often contribute to savings accounts and junior ISAS for the children before they as adults have sorted their own finances,’ says Moira. ‘This is a big mistake – in the case of junior ISAS, the money is locked up until your child turns 18, so there’s no getting it back in an emergency – such as redundancy.’ Her advice is to hold the money within your own ISA – adults have a generous £20,000 limit per year – and give it to them later when you’re sure you can afford to.
The same applies to BOMAD – the Bank of Mum and Dad – and BOGAG – the Bank of Grandma and Grandad.
It’s natural to want to help your child or grandchild with a property purchase, but are your own finances secure enough?
And what about NOGAG? All that free childcare generously provided by the Nursery of Grandma and Grandad can limit women’s earning power in later life, which could cost you your financial resilience in years to come.
I’m not saying we shouldn’t contribute, but our families need to realise that there are limits to our generosity. Grounding your decisions within the context of a wider financial plan can help you to understand your own needs and communicate these clearly to those closest to you.
It’s vital to get our own finances in order before giving money away