Love Is Not Enough: A Smart Woman’s Guide to Money. Merryn Webb Somerset

the feeling that once you’ve earned your own money you’ll find that for the rest of your life you’d prefer to make it than to take it. That means that even after you have married you still have to have an eye to your independence: you need your own savings and your own source of income to fall back on.

      Face it: you aren’t going to win the lottery and the lottery of love is never going to pay out to your full satisfaction. You’ve got to look after yourself.

       Times are tough

      Unfortunately for women, the time when we have no choice but to confront our own finances and plan for our own futures has coincided with a period when things are pretty tough. All the things our parents seemed to take for granted – being able to buy a house, support as many children as they got around to having and then retire in reasonable comfort – seem far out of reach today I met a man a few weeks ago who had joined the BBC as a graduate trainee 50 years ago on a starting salary of £500 a year. It wasn’t much, he said, but he and his wife still managed to buy a flat in London’s South Kensington in which to start their lives together. ‘South Kensington,’ I said, ‘how much was that?’ ‘Five hundred pounds,’ he said. Now South Kensington wasn’t as smart 50 years ago as it is now, but just imagine being able to buy a flat in central London for the same as a graduate trainee’s salary (around £20,000) today. How much easier would that make life?

      The same man has – like most of his generation – a final salary pension scheme. He has never really had to worry much about his retirement, his company did that for him and now they pay him a nice pension every year. That won’t happen to our generation: current state pensions are tiny and by the time we retire they are going to be even tinier – if they exist at all. These days if you want to survive in any style in your old age you are going to have to come up with the cash for it yourself. You are going to have to work harder than your parents and probably retire later. At the same time, taxes have recently risen enormously – you pay tax on almost everything. On your clothes, your food, your shoes, your alcohol, your petrol, your car, your aeroplane flights, your insurance and on all your investments. Overall, 40% of the nation’s wealth disappears into the deep pockets of the state. Nobody really knows where it goes after that but one thing is certain: it won’t be around to bail you out when you can’t pay your bills in your seventies.

      Oh, and don’t expect to inherit enough money to make it all OK either. Not only is the government intent on making sure that inheritance tax eventually hits everyone with two pennies to rub together but your parents are now likely to be living well into their eighties. That cash you had your eye on? The odds are they’ll still be spending it when you’re in your sixties. The fact is that young people today are at a serious disadvantage financially compared to previous generations. We are, says think tank Reform, the IPOD generation – insecure, pressured, overtaxed and debt-ridden.

      But just as the serious demands on your money – housing, pensions, tax and so on – have become more intense so has the pressure to consume non-essentials. As most of us have everything we need the only way for companies to grow their profits is to sell us stuff we don’t need. And that’s exactly what they do – with enormous skill. So successful has the advertising and marketing industry been that half of us appear genuinely to think that we need £20 scrubbing lotions to get clean and £500 handbags to look acceptable when we go out for dinner. We’ve got too many obligations – or we think we have too many obligations – and not enough cash. How, we think, can we possibly live a reasonable lifestyle and still save enough so that we aren’t living off dog food in our old age?

      The answer is that we can do so if we take control of our money rather than letting it control us. That means understanding it, talking about it and making it work for us. It also means being comfortable with it – knowing that using money well is neither embarrassing nor intimidating. Too many women still think money is a dirty word, still think that being rubbish with money is somehow feminine and still refuse to have proper conversations about it. In the last 100 years we have made huge leaps both in the workplace (I don’t think there are many who would still claim that men are necessarily better lawyers, managers or doctors than women) and outside the workplace (men still don’t do as much housework or childcare as we do but the fact that they should is pretty firmly established), but there is one more step to take before we can say we have tried properly to create real equality with men – we have to start sorting out our own finances.

      Back in the 1970s feminists got very worked up about the ongoing passivity among women when it came to money. We could cope with going out into the workplace and making the money, but investing it? Buying houses with it? Arranging pensions with it? In the 1970s we thought that all those things should be dealt with by men. But the really absurd thing is that 30-odd years on nothing has changed: many of us – in our heart of hearts – still do. We see a brown envelope in the post and we either ignore it or hand it on to someone else.

      When was the last time you had a conversation about money with a girlfriend? For many of us the answer is never. Men talk about money, they exchange stock and fund tips, they compare mortgage deals and the cost of new cars and boast to each other about their financial successes. But the closest most of us ever get to a proper chat about personal finances is when we lie to each other over coffee about how much our new clothes cost. We have to get over this passivity. And, given how important financial security is to our long-term contentment, we have to do it soon. We have to give managing our money the same level of attention as we give our diets, our houses, our health and our jobs, because no one else is going to do it for us.

       You can do it

      The good news is that you can both live well and prepare for the future, and much more easily than you think, as long as you are prepared to put a bit of work into it. There are two things to note here. First, the financial world is much simpler than the financial professionals would like you to think it is – this book explains everything you need to know to sort out a whole lifetime of money in three hundred straightforward pages. Second, and more importantly, there is little doubt that once they put their minds to it, women are just as good with money as men and in some ways often better.

      There is evidence that women who do invest are better at it than men, for example: research from Digital Look shows that over more or less every time period, female investors have outperformed male investors. In 2003, for example, the average woman’s portfolio rose by 10% a year. The FTSE index (which measures the performance of the UK stock market as a whole) rose by 7% and the average man’s portfolio by 6%. And even in the year to the end of October 2002 when the FTSE fell by 22% the average female portfolio rose by 2%. So much for the idea that women are useless with money; in fact once we overcome our passivity and get started we are actually pretty good with it.

      All this makes complete sense to me. Not everyone likes to admit it but in lots of ways the very nature of women makes us better suited to long-term money management. Thanks to social and biological roles as nurturers and carers, women are in general more cautious, patient and questioning than men. They don’t mind admitting ignorance and asking for things to be explained. They know that money doesn’t grow overnight and that investing and saving, like bringing up children, is a long-term job that requires substantial amounts of planning. And they know that when it comes to money the small things matter as much as the big things. All in all (and this is a huge generalization but not an unfair one), we have a much better temperament for dealing with money than many men. What we need is the knowledge and the will to take advantage of it and this is where we too often fall down.

       Taking charge

      I’ve been through a