Why a Melbourne vegan cafe closure should ring alarm bells for women in Northern Ireland
We normally stay pretty close to home in this column, but something has just happened abroad that should ring alarm bells for all women in Northern Ireland concerned about their personal finances.
‘Handsome Her’ was a vegan cafe in Melbourne run ‘by women, for women’. They got into trouble in the local press for insisting on priority seating for women, and – here was their big mistake – charging men an extra 18 per cent, which they called a ‘man tax’ to reflect the ‘gender pay gap’.
Outrage followed from men’s rights groups in a sustained campaign which the cafe owners said turned them ‘into the punching-bag of the internet’.
Handsome Her closed its doors three weeks ago, after two years in business, although the owners insisted it was not because of the man tax debacle, they were simply moving on for their own reasons.
Back here in Ireland, this mention of ‘gender pay gap’ can serve as a global reminder of the particular financial challenges for women in Northern Ireland and the UK. Both genders, but women in particular, need to pay attention to their money. In fact, all that follows applies equally to women and men; it’s an exercise in ‘back to basics’ in keeping our finances on track.
Here are some thoughts on what you might want to consider to improve your financial planning. Don’t worry that it’s chronological, starting in your 20s – all this stuff applies for any age group and, as I say, both men and women.
First, if you’re starting out on your working career, perhaps in your early twenties, there are two important things to consider.
Most important: get yourself into a pension scheme! You may well be auto-enrolled into your workplace pension, and an early start in pension saving is crucial. It’s the first pound you ever pay into your pension that works hardest for you, as it’ll be invested for 45 years or more. In fact, the Bristol-based investment company Hargreaves Lansdown have calculated that, even given moderate market conditions, your first pound can have grown into £28 by retirement. What a great return!
Of course pension savings are locked away until you turn 55, and that’s expected to rise to 57 in 2028.
That’s why saving for the short term is also important, to have a bit of a nest egg for emergencies. Quick story for you, just to explain that.
A plumber I know – let’s call him ‘Danny Boy Plumbing (“The pipes, the pipes are calling”)’ once told me it’s wise to spend a bit more to have quality materials. “Cheap pipes are fine, until something goes wrong – and something always goes wrong.” The same applies to life in general, and so it’s wise to have a few pounds tucked away in the bank, which brings us to our second suggestion.
You might want to consider regular saving, tax-free, into an Isa. Many people don’t know that you can have more than one Isa these days, you could have a Cash Isa which is highly accessible, and then an Investment Isa placing your money in the stock market. The Investment Isa is a more long-term savings vehicle, perhaps best left to grow for you over five to ten years.
Next you move into your 30s, the time when you might start a family. This is when many people get around to life insurance, to protect your family if something tragic happens to you, and also critical illness insurance, which pays a lump sum if you are struck down by cancer, stroke, heart attack or other serious setback. These are the ‘family protection’ products, and they’re well-named: they protect your family’s wellbeing and lifestyle.
Now that you’re protected with all the above in place, you can get on with flogging yourself at the grindstone for years, saving those pension contributions, until the time when you want to access your pension. Since 2015 we have been allowed to draw down money from our pension savings, either to spend, pay off the rest of the mortgage, or re-invest.
More than £25 billion has been withdrawn from pensions since that time, with 284,000 people drawing down £2 billion in the first quarter of this year alone.
However, the industry is extremely concerned at the large numbers ‘going it alone’ with only basic printed information, or even none at all, to guide them.
Pensions drawdown can be a minefield – former pensions minister Steve Webb has called it ‘bewilderingly complicated’, and if it’s baffling Steve, what hope is there for normal people? If you don’t know what you’re doing, you can land yourself with a huge and unexpected tax bill.
These are just a few of the ideas we have. Life is better with a plan – and a plan is better with sound professional advice.
:: Michael Kennedy and Shaun Doherty are independent financial advisers and pensions specialists, and can be contacted on 028 71886005. Further information on Facebook at “Kennedy Independent Financial Advice Ltd” or at www.mkennedyfinancial.com