Today we’re talking to Iona Bain about three of the main challenges that women face in order to create financial independence.
Iona shares with us some really fantastic tips around how we can assert more value, particularly in terms of charging and our self worth. Also the impact that relationships can have on how we manage finances and long term wealth creation.
For those of you who don’t know her, Iona is the founder of the Young Money Blog. She’s an award winning speaker, author of Spare Change, her first book. Iona will be releasing her second book next year, and is also a personal finance journalist. This series on the podcast is all about wealth creation. Even just that word wealth can be quite daunting for a lot of women because we don’t actually believe that we’re capable of creating wealth.
So I’ve invited Iona to talk to us about some of the challenges that women face to create financial independence and how we can really start to believe that we’re worthy of getting our personal finances into shape at any age.
Before we talk about challenges to create financial independence, introduce us and tell us a little bit about the work that you do in the personal finance space?
Well, I ended up writing about money by accident. I actually started out as a musician. I trained as a musician here in Scotland and studied music in England before coming back to Scotland and trying to make a living as a musician and a music journalist in my early twenties. I thought I was living the dream and I never really thought that I would end up doing this.
But I think the reason why I got interested in money and economics is that I graduated just after the last financial crash. So up to that point in my life I thought the sky was the limit and I could achieve anything if I put my mind to it. And then I found out that even with a pretty good degree, a lot of get up and go, and a really can do attitude in life, I still found myself struggling because there were not that many job opportunities out there. The only decent job opportunities seemed to come with unpaid internships, which I couldn’t afford to take. And lots of young people I knew were having to live at home with their parents for much longer than they ideally wanted to, including myself.
I absolutely love my parents, but it was very frustrating to not be able to achieve financial independence. And I realised I was far from alone, that this was becoming a really common theme within my generation. And I realised that this was because things had just got so much tougher after the financial crash, and that you needed to be that much more aware of your finances in order to get on in the world. So I started becoming a lot more interested, obsessed if you like.
I suppose the real moment of realisation for me was when I was doing gigs in Glasgow and I would come home to my parents’ house in Edinburgh and stay with them. The money that I got from doing these gigs was cash in hand and I used to put this money in a piggy bank and I kept this piggy bank in my childhood bedroom in my parents’ house. And I thought I was being really grown up and sensible. But I came home one night and I went up to my room and I discovered that we’d been burgled. And of course the piggy bank was gone because, I mean, that must’ve been a burglar’s dream come true to just see a piggy bank there full of money. So when I had to give a description of the piggy bank to a police officer later on that evening, about it being pink and having a tail and having possibly sunglasses, I just thought to myself, this is ludicrous. I am going to have to get so much better with money if I’m going to survive and thrive in the real world.
That was really the moment that I started pivoting away from music and towards personal finance. I started my blog Young Money Blog. It was pretty much the only personal finance blog for young people in the UK at that time. There were not that many blogs out there, certainly not that many written by women. And therefore I found myself as the only young person really talking and speaking about personal finance and also having that added rarity of being a woman talking about these issues. And then as the years went on, I realised there was a lot of interest and demand in young people talking about these issues and speaking about it from that perspective. So really things just grew from there, and so that’s why I’m here today.
What did you used to play, what was your musical instrument of choice?
Well, I still play, I love to do music in my spare time, so I play piano and cello. And I also was a singer and songwriter. I started out doing classical music and then I moved over to pop maybe because I was trying to be a bit rebellious, but also just because I loved pop music.
For a while I really wanted to be a singer songwriter and I really tried to pursue that. I played in a lot of bands as well, and I had an electric cello, which is really cool because it doesn’t have a body, it just has a frame, and you can turn up the volume when you’re in rock bands. When you’re playing with really loud guitars, you can just turn it up so people can still hear you.
I love music and it’s still a huge passion in my life, but in a way I’m really quite relieved that I don’t have to make a living from it because that way, my love for it will never be compromised by having to do things that I don’t feel comfortable with.
That’s amazing. So you talked about the experience of being burgled and having that piggy bank robbed and taken away from you.
What impact did that have on you?
Well, it was a really shocking moment to be honest, because obviously anybody that’s been the victim of crime like that feels violated. It’s not nice knowing that people have been in your home and been through all your possessions. I also had jewellery in my bedroom, which thankfully was pretty well stored away, so they didn’t actually steal anything that was of real value. I had a gift from my friends when I left school, a Tiffany bracelet which means a lot to me personally, and they didn’t manage to find that. So it could have been a lot worse, but it was still very shocking and violating.
I think it had a big effect on me because I realised that you could work really hard for your money, you could put in so many hours of work behind the scenes, you could then go and do the job and execute it really well, but fundamentally just because you do that doesn’t mean that you will hold onto the value of your money, that your money will be protected. You’ve got to take that extra step of really conserving the money that you own. It’s not enough to just find a job and earn that money. You’ve got to actually protect your money as well.
That was a big wake up call for me because I realised there was so much more that I could do to protect my hard earned money. And that’s what started my journey of learning so much more about personal finance.
Where did you start learning about it?
I learned on the job really. I didn’t do a finance or economics degree, I just started learning about it by writing. I am a big believer that if you don’t know that much about something, you can’t be writing and talking about it.
I was quite fortunate, I will admit, because my dad was a business journalist before he retired a couple of years ago, but he had never said to either me or my brother when we were growing up that we ought to follow in his footsteps. He always wanted us to go our own way and find our own calling in life. But then when I started expressing more of an interest in this stuff, he said, “Well, I can point you in the direction of resources that you could look at to really learn more.” But actually these were resources that anyone could get their hands on – it was mainly the personal finance sections of newspapers and reading the money news and the business news, and then now with the internet you can find out anything. It’s so much more egalitarian. I really do wonder how people a generation ago before the internet got their hands on information, except for going to the library and reading newspapers, which would only get you so far. But the internet has just opened up the possibilities for learning in such a huge way.
So as that kind of became more sophisticated and evolved, I leaned a lot on the internet to learn more, and I read books. I just did what I could to soak up this whole area over many years and tried to put it into practice in my personal finances as well.
But when you write a blog, it keeps you accountable. And that’s really helpful because I think sometimes when people want to make those changes in their life, whether it’s financial or anything else, one of the problems is that they do it in private and they keep it secret. And so their success is a secret and so are their failures. And I understand why: I think it’s very scary to open up about your own weaknesses in front of other people. But in a way, if you do keep yourself accountable in public, it does make it so much easier to make progress and to go two steps forward one step back, which is how it always is for people. And people understand that’s how it works. It’s not some seamless, upward trajectory. You will have setbacks, you will make mistakes, you will do things wrong. And I’ve always put the emphasis on that in my blog.
I’m not perfect. I don’t really like calling myself an expert. I think it’s a really misleading word because I’m not an expert. I’m like everyone else – I’m learning, I’m trying to get better. I don’t have all the answers. I still make mistakes. But the point is that I regard it as important and as a priority in my life. And as a result, I have got so much better than I was when I was in my early twenties, putting money in a piggy bank and hoping for the best.
Yeah. And I think that’s really vulnerable for you to share that because, like you suggested, we’re not perfect. None of us are perfect with money. And you mentioned as well about having secrets. I often talk about how we feel about money can be a huge challenge for women.
With the work that you do and the conversations that you have, Iona, what challenges do you think that women have particularly around how we feel about money?
Well, I think the first challenge is that the experience of being financially independent is a relatively new one for women. We have to remind ourselves that only a few decades ago, women were unable to take out their own mortgage. When my Mum was my age, a pub could legally refuse to serve her if she was the one buying a round. And that only changed in 1982.
Women have only been truly independent in the last few decades. And that is pretty recent in the grand scheme of things. So I think we’re still getting used to the novelty, if you like, of going out to work. Of earning our own living, of managing our finances and having choices, choosing whether or not we want to be part of a family or choosing whether or not we want to go it alone, choosing whether we want to work in full time employment or whether we want to be self employed and be our own boss.
These are new choices for women, and it’s understandable that we’re still grappling with a lot of the conflicts and dilemmas that those present. So I think that the main challenges are;
- Asserting your own value and worth. This has been a huge learning curve for me because I’m self employed now. And since I started in this field I’ve been in and out of full time work and I’ve tried freelancing in the past and failed because A) I couldn’t handle rejection and B) I wasn’t very good at asserting my own value and my own self worth. So the past few years have been a process of learning what my worth was and being prepared to assert it. And I think that’s the number one challenge that all women face, whether they are self employed or in full time work, understanding your value and asserting it.
- The second challenge I think is relationships. It’s wonderful now that women can choose to be in a relationship with someone and choose to have a family and not feel culturally or socially obliged. I understand, of course, that we are still in a culture that does put enormous pressure on women to couple up and be part of a unit in that way. But it is nowhere near as oppressive as it was, therefore nowadays we also have a choice about whether we want to be independent within a relationship or whether we merge our finances with someone else. It’s a very personal choice and you can’t tell anyone what they should or shouldn’t do in their relationships, but there are enormous challenges in managing your finances with someone else and huge risks as well. And if it goes wrong, generally speaking, it’s the woman who comes out worse. So that’s the second biggest challenge.
- And thinking about specific aspects of women’s long term wealth, particularly investing in pensions, these are not areas that women are matching men in. These are areas where we’re falling behind, where we’re not as informed, where we’re not as confident, and where we really risk being worse off in the long run.
So I think those are the three challenges: asserting our value, managing our relationships with other people, particularly with a romantic partner, and getting clued up about our long term wealth.
Thank you for sharing those. Can we just take a few minutes to talk very briefly about each of those?
You mentioned some of the challenges that you’ve had yourself around recognising your self worth. In the freelance space, particularly, I think this is a challenge because the flow of money is difficult. People don’t always pay on time or you’re doing the work first and then being paid afterwards. There is this ebb and flow of money coming in and going out.
You mentioned some personal experience in that. What did you learn about that journey yourself and what tips would you give to anybody who’s in a similar situation where they’re not valuing their own self worth?
Well, I’ll give an example. A few years back. I did a project where I felt really lucky to have been asked to do it. I offered a price for this project on the basis that I just wanted to do it, and really I’d be prepared to do it at pretty much any price, but I still thought it was a really good payday for me. I did the project, and I wasn’t very confident whilst I was doing it. I felt a little bit put down and put in my place, and like I hadn’t been fully respected during that project.
I met up with someone for lunch not that long after and I was talking about my pricing for these kinds of projects. And this chap did me a huge favour because he said to me, “You should know that even though it’s not in my interest to tell you this, because actually I could just accept the price that you’ve been giving me and get you on the cheap, that you are massively undervaluing yourself. The actual market rate for what you do is £X and people who are not as experienced as you have been charging £X and nobody bats an eyelid.”
Now, I wanted to go home and scream into a pillow. I felt annoyed and frustrated with myself more than anything. But that was a moment where I realised that those kinds of people are rare. That you’re not going to have people around you looking out for you in that way, making sure you value yourself, the person who has to take responsibility for that is you. Nobody is going to think that is as important as you, so it’s up to you to figure out what your value is.
Ever since then I’ve been so much better at figuring out what the market rates are for my work, asking if need be, and sharing that information with other people. Because it can’t be a one way street either. If someone comes to you and says, “What’s the market rate for this?” You have to be honest with them, particularly if it’s another woman, because you have a duty to share that information with other women so that they don’t have a similar experience. A rising tide lifts all boats. If they end up being better paid and better respected, then you will be too. And I think that’s the core to it.
I wonder whether or not if I’d have asked for a better fee and just know my own value more, I might have actually also been respected more during that project and not undervalued in other ways outside of the money. So I think that was the real wake up call for me.
Wow. What I love about that is it makes me think about that analogy about filling your own cup first, because if we don’t fill our own cup, we can’t help others as much as we’d like. But there is always that ickiness isn’t there around knowing what to charge.
People don’t even like having conversations about money because it feels taboo and awkward.
I could not agree with you more about that analogy of making sure your cup is filled before you help others because I think women feel this huge pressure to look out for others all the time, and to tune into other people’s feelings to make sure that they’re okay, and to sometimes put themselves at the bottom of the priority list.
I think as a woman who has been pursuing my kind of career, it’s been very difficult for me to give myself permission to look out for myself and to focus on the bottom line. And to assert my value – that has at times felt like I’m going against the grain and I’ve had to really push through that. And now I feel much more comfortable doing it. I can’t say I feel totally comfortable doing it; two steps forward one step back. But I’m certainly a lot better and a lot more individualistic.
Individualistic is a word with a lot of negative connotations, but in a way you do have to put yourself first and a group of people you really value and love are a very close second. But it’s not possible to look after them unless you are looked after as well.
Yeah, that’s great. And I love the fact that guy spent some time just having that conversation with you because sometimes as women we’re quite vulnerable. When we feel like we’re in a trusted environment or in a trusted relationship, whether that’s a girlfriend or friends, we are very willing to help others.
I think that’s one of the great powers that we have is that we are very giving, but because we’re so giving that can bring up a lot of self sabotage and lack of self worth and confidence, which actually brings you into the final point you were making about long term wealth creation, Iona.
I think that confidence is a massive reason why women are not making decisions about long term wealth creation, because maybe they’re feeling like it’s too late. I have conversations pretty much every day from women in their fifties, for example, who say, ‘Oh, I’ve left it too late.’
Do you think that this wealth gap is a problem for women at all ages?
I think it is a problem for women at all ages, but at certain points it’s less acute than at other points. So for instance, it’s a little known fact that women in their twenties generally speaking, are actually pretty much paid the same as men. Sometimes they’re paid even more than men. Of course, it really depends on the profession and the job, but actually the gender pay gap is it’s way smaller for women in their twenties.
Obviously the pinch point is when women have children and when they then take time out of work and that holds back that promotion within the workplace, and it holds back that wage progression. So I think the challenges for women in their twenties and early thirties, which is the group that I write about mostly, is this conflict that they feel between wanting to enjoy life, get the most out of all the freedoms that we have today, but also make plans for the future. And to be fair, that is a conflict that faces men as well.
I think that we have got ourselves into a situation where we think it’s either/or. We either enjoy today or we’re secure tomorrow. And my job is to try to persuade both men and women that it doesn’t have to be either/or. That both are possible if you think really carefully about your values, how you’re spending your money, and whether the two align. Then as women get older, obviously when they start to have families and greater responsibilities, it is women who bear more of those responsibilities, both for looking after elderly parents, but also looking after children. So their challenge is how do they do that whilst also maintaining their own financial independence?
I am very pro-financial independence for women. I think even if you are in a relationship or if you have a family, I feel very strongly the woman should have their own plans and own provisions because otherwise they are really vulnerable.
That brings me onto: I think the main challenge facing older women is often that they have ended up being divorced and being reliant on their husband’s income and wealth. For many years, the husbands have often taken decisions without consulting the wife. I saw it a lot when I was working for a newspaper that focused on financial advice in my early twenties. I spoke to financial advisers all the time, and many of them wanted women to be involved more in the conversations, but sometimes the husbands just automatically put themselves forward for those discussions and didn’t include their wives, and it’s such a common problem within the financial advice space.
That is something that we’ve seen come up with the whole issue with Waspi women: the women who have been campaigning for a greater state pension, those women who were born in the 1950s, they feel extremely short changed and frustrated and resentful about not having a state pension that they can live on, which is completely understandable. And I think it really just exposes how vulnerable women can be in relationships. I think younger women may look at that generation of women and feel like really some of the real poverty that they face now is a very strong case for making your own plans and provisions. Even if you feel that’s unromantic and that it goes against the spirit of marriage. Unfortunately, I think you’ve got to think with your head and your heart in these situations.
You mentioned about the importance for women to be financially independent. What does that word financial independence mean to you?
It means that you will manage your finances the same way pretty much, regardless of whether you are in a relationship or not, and that you will have your own plans and dreams regardless of your romantic situation.
I’m single, so I am going to be much more biased towards financial independence as a result, and I accept that my feelings and thoughts around it might change if I get married and couple up in that way. But I still don’t think I’m ever going to jump into having a joint bank account or that I’m ever going to give up saving and investing for my own retirement. These are habits that I’m not going to give up, even if I ended up in a really committed, serious relationship.
And I think that all women can benefit from having their own financial plan. The question of whether you should have a joint bank account or not, like I said before, it’s very personal and it’s up to the dynamics in your own relationship. But I think that often it can be a really huge source of and conflict. Money can be a signifier of lots of things, and actually having some privacy – not secrecy because I think there’s a difference between privacy and secrecy – for your finances is really important.
Yeah. And I think that the reason that a lot of conflict happens in relationships around money is because we don’t actually bring any curiosity to the fact that you, as an individual, have grown up with different messages about money, different stories, different secrets, different things that your parents taught you, or didn’t tell you about money, and that you’re bringing two people together.
It’s not two halves of one person, it’s two whole people coming together in a relationship. Financially there’s going to be some conflict there just because of our beliefs and our emotions that we attach to money.
Yeah, absolutely. And relationships are a team aren’t they? They’re a team of two people working together towards mutual goals, but ultimately they are also about interdependence, not dependence. And that applies across all aspects of a relationship or marriage. When both parties understand that that other person is an individual in their own right, that they have the rights to their own career, their own friends, their own interests.
By all means you’ve got to compromise. You’ve got to give and take, but you can’t just submerge your whole identity and everything that’s come before into one completely blended unit. I just don’t think today in the modern world that’s a recipe for happiness or for the financial prosperity that a woman needs to have just in case things go wrong.
I love that word, financial prosperity. That’s a lovely way of looking at it.
Just to finish off, what would be your biggest tip then for any woman or man who really wants to build this financial independence?
This might sound a little bit counter intuitive, but you don’t have to have everything mapped out. You do not have to have a completely crystal clear plan about your future. You might be at a stage in life, particularly at this moment in time, where it’s okay not to be clear about your future. It’s okay for things to be somewhat up in the air. The most important thing is that you save and invest regardless. That you do it for the short term to just give yourself a little bit of a buffer, just in case things go wrong.
I think we’ve seen with this crisis how deeply, deeply important that is for people. And that you also save and invest for the long term to give yourself options and choices. Because I think that it’s great to have goals, I have goals. I have dreams about the future. And I think obviously if you know that you want to buy a house in the future, it really pays to be clear about that, because then you can find a product like the lifetime ISA where you get money from the government towards that goal. So in that case, it really does help to have a clear, defined goal in mind. But outside of that, it’s okay to just save and invest for its own sake.
It’s also okay not to have all the answers. And don’t be put off and demoralised by lots of people online who are making out that they’re making thousands of pounds from trading Forex and buying stocks and shares and sexy companies and that they’re absolutely smashing it. And that you by comparison are only making a measly 4% or 5%. It really doesn’t matter. It’s not a competition. This is about your life. It’s about you having choices, options, and freedom in the future. So just go for it. And even if you can only put £10 in that future fund each week, it’s better than nothing. It will make such a huge difference over the long term and it will be one of the best, if not the best decision you ever make.
Fantastic. We talk about small steps. You don’t have to have everything figured out, and actually for a lot of people we find it challenging to think long term.
I often say that it does help to have three broad time-frames in mind: the short term, medium term, and the long term. When you think like that, it’s actually quite easy then to structure your finances.
The analogy I give around the small, medium and long term is like your fridge freezer and your larder. You want to fill up all three, but the things that you want access sometimes but not all the time in the larder. Those are like your high interest regular saver accounts.
Your fridge is your every day operating accounts, your bank account etc.
And then you’re putting stuff in your freezer that you might need at some point but don’t know when in the future, and that you can just claw it out when you need it.
Thank you so much for sharing some information with us today. If anyone wants to connect with you and follow your blog, what’s the best way for them to get in touch with you?
I write regularly on my blog, which is Young Money Blog, and I am on Twitter as well. I have a YouTube channel and I’ve just started doing videos on there this year, which are going down well, so please feel free to subscribe to that and check out what we’re doing. They’re quite fun and informative.
I’m also writing my second book ‘Own It.’ It’s going to be all about how to own your future through long term saving and investing. It’s going to be really fun and down to earth, but informative. Really give you that helpful overview of all your saving and investing options for the future. That is hopefully going to be out early next year.
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