As high-earning women, it’s important to understand how to properly manage and grow your wealth. This guide takes on this topic by covering strategic investing, tax optimisation, insurance, retirement planning, and leveraging professional networks. With these insights, we hope women can secure their financial future, achieve their goals, and enjoy their success.
In recent years, the number of women earning six-figure salaries in the UK has been steadily rising. As these professionals continue to break glass ceilings and redefine success, their financial needs and goals become increasingly sophisticated. Whether you’re a seasoned executive or an entrepreneur, understanding how to effectively manage and grow your wealth is crucial. This blog provides actionable insights tailored specifically for women earning six-figure incomes, empowering you to make informed financial decisions and secure a prosperous future.
Embrace strategic investing
Investing is a powerful tool for building wealth, yet many women remain underinvested compared to their male counterparts. To bridge this gap:
Educate Yourself: Start by understanding different investment vehicles such as stocks, bonds, mutual funds, and real estate. Resources like financial blogs, online courses, and workshops can be invaluable.
Diversify Your Portfolio: Spread your investments across various asset classes to mitigate risk and maximise returns. Consider not only traditional investments like stocks and bonds but also alternative asset classes. This can include private equity, hedge funds, peer-to-peer lending, or investing in startups. Opportunities such as the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) offer tax incentives for investing in high-growth potential companies. These alternatives can provide significant returns and further diversify your investment portfolio.
Seek Professional Advice: Consider consulting with a financial advisor, such as Frankie Smith, who understands your unique goals and risk tolerance. At Frankie’s we also work with a number of strategic partners who can provide bespoke investment advice tailored to high earners.
Optimise your tax strategy
Effective tax planning can significantly enhance your net income and savings:
Maximise Pension Contributions: Take advantage of the tax relief available on pension contributions. The annual allowance for pension contributions is currently £60,000, but this can vary based on your income. You could also consider looking into a self-invested personal pension scheme to increase your retirement contributions.
Utilise ISAs: Individual Savings Accounts (ISAs) allow you to save and invest up to £20,000 per year tax-free. Explore both Cash ISAs and Stocks & Shares ISAs to suit your risk appetite. Consider opening Junior ISAs for your children as well, providing a tax-efficient way to save for their future.
Consider Tax-Efficient Investments: Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS) offer tax reliefs, though they come with higher risk.
Protect your wealth with insurance
As your income and assets grow, so does the importance of protecting them:
Income Protection Insurance: This ensures you continue to receive an income if you’re unable to work due to illness or injury.
Critical Illness Cover: Provides a lump sum payment if you’re diagnosed with a serious illness, helping to cover medical costs and other expenses.
Life Insurance: Essential for those with dependents, life insurance can provide financial security for your loved ones in the event of your untimely passing.
Plan for retirement early
Retirement planning is a crucial aspect of financial management for high earners:
Set Clear Goals: Determine the lifestyle you want in retirement and estimate the funds required to sustain it.
Regularly Review Your Plan: As your income and circumstances change, reassess your retirement plan to ensure it remains aligned with your goals.
Consider Alternative Retirement Funds: Beyond pensions, look into investments like property or a diversified portfolio to provide additional retirement income.
Leverage professional networks
Networking can provide invaluable opportunities to not only grow your financial knowledge but also support personal and professional growth in other ways:
Join Communities: Communities like Frankie’s offer personalised support, resources, and amazing networking opportunities to meet women on a similar financial journey.
Mentorship: Seek out mentors who can provide guidance and share their experiences. Additionally, consider mentoring others, which can be both rewarding and insightful.
Balance short-term goals with long-term vision
While it’s important to plan for the future, don’t neglect your short-term financial needs and goals:
Maintain an Emergency Fund: Ensure you have a readily accessible fund covering 3-6 months of living expenses.
Indulge Wisely: Enjoy your hard-earned income by spending on experiences and items that bring you joy, but do so within a budget that doesn’t compromise your long-term goals.
Stay informed and adaptable
The financial landscape is constantly evolving, and staying informed is key to making sound decisions:
Continuous Learning: Regularly read financial news, attend seminars, and engage with financial planning communities. Our weekly newsletter is a great resource!
Adaptability: Be prepared to adjust your strategies in response to changes in the market, legislation, and your personal circumstances. Working with a financial advisor can help with this.
Achieving a six-figure income is a significant milestone, but managing and growing that income requires informed and strategic planning. By embracing these financial strategies, you can secure your financial future, achieve your goals, and enjoy the fruits of your labour. Remember, the path to financial empowerment is a journey, and every step you take brings you closer to the financial freedom and security you deserve.
For personalised financial advice tailored to your unique needs and goals, consider joining our membership. Gain access to expert insights, industry news, and bespoke resources designed to help you thrive, additionally, you can book a call with Frankie to discuss your journey privately.