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

of unpaid or underpaid work experience, I’ve had and left badly paid jobs in television and journalism as well as a few highly paid jobs in the City, I’ve worked full-time, part-time and freelance as well as in London and in Tokyo, I’ve participated in the setting up of a new business and most recently, in rather quicker succession than I initially intended, I’ve married and had a baby. I’ve been grossly financially irresponsible during a lot of this but I’ve also now managed to pull myself together and emerge in a relatively stable position.

      A few years ago I realized that while I liked to think I had my finances under control, I simply didn’t. I had no pension arrangements and no plan in place for paying off my mortgage. I had various bits and bobs of savings but no real plan as to how they worked together. Then something happened to jolt me into action. I met my husband and he moved into my flat and took over half the mortgage. He was interested to see that it was an interest-only mortgage. How are you saving to pay it off at the end of the term? he asked. I confessed I wasn’t. He was horrified and I was embarrassed. But I was also prompted by his surprise, as well as his unwillingness to sort it all out for me (as he says, if he has to do half the housework, I can sort out my own bank accounts), to take charge of my own money. So I’ve sorted out my pension arrangements, I’ve started saving regularly and doing so in a tax-efficient way, I’ve switched the mortgage to the cheapest repayment mortgage I could find, I’ve reviewed my income and made sure it matches my skills and the work I put in, I’ve made sure we are paying the lowest possible prices for all our utilities and I’ve put a check on some (not all) of my unnecessary spending. It’s taken some time and been a reasonable amount of effort, but it feels very good indeed.

      The point of this book is to show you that you too can use your natural skills to take control of your finances at every stage of your life. The first section looks at how to increase the amount of money you have every month. Your income is the most important factor when it comes to controlling your finances. Once you know that you are getting paid as much as you can for what you do you can settle down to working out how to turn that income into wealth. So the fact that most of us aren’t maximizing our incomes, aren’t paid what we are really worth, or as much as the man at the next desk, is a fundamental problem that we need to sort out as fast as we can. The section then considers spending (which isn’t all bad) and at debt (which also isn’t all bad).

      The second section looks at how you can grow your assets – at saving, investing, pensions and property. Here we’ll go through the financial options on the market and explain which ones offer value and which ones are simply complicated vehicles invented by the financial industry to rip you off. I want to be the richest pensioner on my road when I retire and I want the same for you (as long as you live on a different road).

      The next section considers what happens when you need to share your money. How will you pay for a wedding and how will you organize your finances within your marriage? How does the money work if you don’t marry but live with a long-term partner? What about children? How much will they cost and how will you pay for them to get what you want them to have? How can you possibly maintain your financial independence if you stop working to look after children? What are your legal rights as a working mother? And what if your marriage doesn’t work out? We look at how to deal with the financial shocks divorce throws at women.

      Finally, in the last section we look at how money can make you happy – and how it can’t. Happiness isn’t all about money but financial clarity in your life will bring you a peace of mind that is hard to beat. I hope that by the time you get to the end of the book your finances will no longer be a source of blushes or stress but a source of that peace of mind.

      Section 1:

      Finding the Money

      “Make your money and buy your freedom.”

      Tamara Mellon, owner of Jimmy Choo

       1

       Maximizing Your Income

       How to Get Paid What You Are Worth

      A few years ago Linda Babcock, a professor at Carnegie Mellon University in the US, noticed that year after year the starting salaries of the men who graduated from her classes were higher than those of the women – to the tune of around 7%. This confused her – they all left with similar qualifications and went into similar jobs. So she investigated. It turned out that the majority of the women, thrilled to be offered jobs, had accepted the starting salaries they had been offered. The men had not. They had negotiated the salary up – by an average of 7%. The employers were not discriminating against the women; the women were discriminating against themselves.

      My mother always told me life wasn’t going to be fair. But for much of my childhood I wasn’t really convinced. It seemed to me that most of the time you got what you deserved. At school if you were nice to people they were generally nice back. If you worked hard you did well in exams and were praised accordingly. And if you didn’t you weren’t. It was the same at university: if you followed the rules and worked hard you got a good degree. If you didn’t you didn’t. Simple and perfectly fair.

      Then I entered the world of work and found that my mother was completely right. In the office things aren’t fair at all: working hard and being nice in no way guarantees you a fair wage. Instead, if you are a woman, it very often condemns you to an unfair one.

      According to the Women and Work Commission, women who work full-time are paid on average 13% less than men who work full-time and women who work part-time are paid a horrible 40% less than men. This gap has not closed significantly for going on 30 years and has barely budged in the last 10: in 1997 New Labour came to power full of heart-warming promises about their female-friendly policies but since then the pay gap between men and women for full-time work has fallen by only 3.6% and for part-time work by a mere 2.5%. If it keeps moving at this snaillike speed, says the Commission, it will be 140 years before male and female part-time workers earn the same wage for similar work.

      The difference this makes is important. The average full-time salary for a man is around £31,000. The average for a woman is more like £23,000. Look at something like the banking sector and the difference is even more extreme: the average salary of a woman is £31,600 a year and that of a man £53,700. And even female company directors are paid less than their male counterparts: a survey from the Institute of Directors in 2005 showed that the pay gap here, in an area where one would think women would be tough enough to get what they wanted, was still 24%.

      So what’s going on? There are all sorts of explanations doing the rounds. The main one is the fact that women tend to leave the workforce for long periods of time to have and to bring up babies, something that stops them moving into senior positions as often and as fast as men. It is also true that women tend to go into traditionally low-paid jobs such as those in childcare, in cleaning and behind cash registers (the three ‘c’s) and where the hours are more flexible than elsewhere. But there is more to it than just this. According to the Equal Opportunities Commission (EOC) 40% of the pay gap between the genders comes down to pure discrimination: women are paid less because they are women. For proof look no further than the fact that even before the baby thing kicks in women are paid less than men: research by the EOC tells us that five years after graduation the difference between the wages of equally educated men and women is, on average, 15%.

      This depressing statistic is backed up by a study done by the London School of Economics (LSE) in 2003. The LSE tracked down 10,000 recent graduates and found that after three years of working (and before having children) the female graduates were earning 12% less than the male graduates. And according to the DTI, overall, single childless women make only 93% of what single childless men make.

      Do you need a degree?

      Education in itself is no guarantee of a high income. Consider the case of the average university degree. Today around 40% of young people go into some form of higher education. This means that having a degree isn’t special any more – everyone who wants one