7 Steps to Financial Freedom and Protection for Women

As my final finance article for this month, I managed to collar the expertise of Arfy Majeed, chartered accountant, financial expert and founder of “Know Your Numbers”. According to Arfy, after doing her own research it was found that 95% of a sample of women in affluent positions did not know how to trade stocks, know what an ISA was or how to calculate VAT correctly. Subsequently she wanted to create a hub where members can access financial education and be part of a community that provides knowledge on investments and wealth.

Her tag line is ‘know your numbers, grow your wealth’ and this is true for either sex but here is the top tips I took away from our discussion. And many were very relevant to women especially!

So if you want to take control of your financial literacy here are the steps:

1.The first and perhaps the most progressive – Have a “F**k It” account. This is your emergency fund, a safety blanket so to speak, in case you need to leave your job or a bad relationship. This should cover 6 months of living expenses – at LEAST.

2. If you like buying luxury apparel, buy items that have a good resell value. Hermes, Chanel, Rolex, Balmain, and brands like these, sell really well on secondary platforms like Vestaire, Luxury Promise and 1stDibs.  She says ‘I have friends that are able to pay for their kids university fees now from sales of their Louis Vuitton’s purchased ten years ago’. Limited edition luxury items can also be an investment.   They become rare and collectors are willing to pay above the odds to secure one.

3. Do you know that 80’s song, “Ice Ice Baby”? Well Arfy proceed to sing it to the tune with ‘ISA, ISA baby’ – I am not sure why a bank marketing team hasn’t thought of that one yet..  There are 6 types of ISA’s on the market.  Each has its own rules, and she strongly recommend them to those eligible.  In all ISA’s there is no tax to pay, so no dividend tax and capital gains tax on investments.   A lifetime ISA and Buy to Let ISA are topped up 25% by the state and will not be available from the 23^rd November this year. Within an innovative ISA you can invest in peer to peer lending, property and unlisted businesses.  Why is it fantastic?  The tax-free element is huge bonus and you don’t even have to declare an ISA on your tax return.

4. Dispose of money. Spend it on wealth! Money sitting in your current account or even worse, in your home in a money box, is a waste of money.   Money devalues over time. £1 now will be roughly -2% less in a year’s time.  Spend your money instead on building wealth for example, properties, funds, businesses, commodities, shares, etc.

5.There is good debt and bad debt. Good debt is like a tool that can be invested in something that will increase in value or create a revenue stream. Bad debt like store cards and pay day loans can eat away at you and quickly spiral out of control – she referred to these as ‘a disease’. If bad debt is in your life make a plan of how you will get rid of it asap. She recommends transferring it to an interest free credit card and paying it off in instalments.

6.Invest in opposite and uncorrelated assets.  For example, if you’re going to invest in crude oil, also invest in sustainable energy.  This helps diversify and mitigate your risk to the asset in case it under-performs

7. Treat your wealth like an old friend or family member that you look after and keep an eye on. Just like you may speak to your mum every day, check your bank balance every day.  Keep a close eye on how your investments are performing, just like how you may keep a close eye on how your kid is doing at school.  Always know your numbers, like a dietitian knows what’s in their food. It’s a simple law of attraction, when you look after something, you attract more of it in your life.  Knowing your numbers is key to growing your wealth!