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How Expat Women can Hot-Step their Way to Financial Freedom

January 2nd 2014

Although men are society’s traditional breadwinners, more and more women, especially expats in Hong Kong, are choosing to balance an ambitious career against the pressures of family life. But ‘having it all’ comes with its own unique set of financial considerations, as Guardian Life Management CEO Simon Parfitt explains.

When Ginger Rogers was asked how she felt about being paid less then her partner Fred Astaire, she supposedly quipped that Fred was a great dancer, but her role was, not only to dance as well as him, but to do so backwards and in high heels. Her point about inequality was made with humour, which is why it sticks in the mind. Nevertheless, many women have to handle such seemingly impossible roles on a daily basis, juggling their professional lives with running a family and a home.

Until recently, very little consideration was given to the potential losses faced by women who take career breaks to raise a family, and the women in question found out much too late that their financial security during these breaks was at risk. An average working woman will break from her career path for as many as 11 years because of family commitments. Such enforced interruptions compromise earning opportunities, damage short-term saving plans and threaten potential retirement prospects.

Personal finances can in fact fracture at the very outset of child bearing, as illustrated by a survey from Maternitycover.com, which shows nearly half of women (45%) got into debt because their maternity leave pay was simply not enough to cover the extra costs incurred. In addition, as many as 68% of women returning to the workplace after childbirth found they earned less than they had previously.

As an adviser, it is pleasing to note that an increasing number of women are exercising personal financial decision-making and control. I’m sure no-one will be surprised to hear that women reveal themselves to be at least as capable as their male counterparts when it comes to mapping out and managing a financial plan. I’ve also found women tend not to buckle when faced with a call to action; when the time comes to make an investment decision for a future event, they do so with confidence and conviction.

If you do feel you could do with a little help on the subject however, here are my top financial planning tips for expat women in Hong Kong.

Start Early

The good news is that there are a number of positive aspects that expatriate professional women discover when they set about sifting through financial products and services to match their ambitions and targets. To begin with, career women find that working overseas means they are more likely to be earning a higher salary than their peers back in their home country. Expatriate employment packages often also cover a number of living expenses over and above the pay grade, generating an increased disposable income, some of which can be made available to finance future plans.

The biggest potential threat to future financial security for expat women is simply a lack of preparation. We all know that a secure financial future doesn’t just drop out of the sky, so taking decisive action years before any anticipated occurrence (such as pregnancy or retirement) demands a concerted effort.

To begin with, a plan must identify the primary financial risks faced by professional women generally. Those 11 years that a woman may be absent from earning an income will have a big effect on family finances, but even here, early planning can shore up enough income, provided a strategy has been put in place at the outset.

Choose Wisely

Three layers of protection should be considered: life insurance, critical illness and health insurance cover. This will ensure all is not lost for your family should something happen to you. Prevention is the better cure, and risking a rushed investment purchase could leave you and your family high and dry. A well thought through strategy brings peace of mind – and that, in the hour of need, is priceless.

Firstly, be sure to check if there is any medical cover offered by your partner’s employer. If so, does that policy stretch to include the family or future family? For example, does it include maternity care? If so, are childbirth costs capped? Given that the cost of a normal delivery at Matilda International Hospital starts from US$26,000, it pays to know how much of the bill you’ll be expected to pick up.

If that’s not an option, women planning a family should consider a healthcare insurance package of their own. It’s worth checking today exactly what benefits are included in any cover you already have or are considering.

Pensions are Paramount

Another significant advantage to working nomadically, as expats tend to do, is the opportunity to invest in international cross-border pensions, which have inherent advantages both within the saving term and when it comes to actual retirement.

It is intriguing to note however that our own research suggests that while 66% of women say they expect to carry on their current lifestyle in retirement, over 50% admit they do not contribute to a company or personal pension. And last time we surveyed older women on this subject we discovered that just 20% receive an adequate pension to support a retirement lifestyle of their choice.

With effective preparation, a sufficient pensionable income becomes not only plausible but realistic. The structuring and implementation of a long term savings plan that is both flexible (one that will permit time out when family pressures cannot be ignored) and robust enough to withstand an expatriate woman’s chosen career path (one that can accommodate and support job changes, company switches and location moves) should be given priority.

Again, we learn from statistics that women have more years in retirement to make provision for than men. On average, women will outlive men by five years – that’s five more years over and above the average retirement term that they must save up for during their working/earning years. And women will on average retire five years earlier than their male partners, so on top of the retirement term itself, another decade’s worth of living has to be provided for.

Monitor your Money

A key element of purposeful planning is to monitor the progress of any set strategy at regular intervals. No established plan can run itself, and as changes in your life occur – new job, new family, new location – new ambitions may reveal themselves. Such changes should always trigger a review of where your money is invested and whether your investments are still appropriate in the light of the new events you may be saving for.

There’s plenty of encouraging data confirming that more women are seeking professional advice to ensure independent control of their financial futures. So, whether it’s a pair of Ginger Rogers-style high heels you’re saving up for, or you’re planning on bringing up a big brood, taking some sturdy steps now will give you the means to keep on dancing.

To arrange a free financial health check with Guardian Life Management, call 3796 3555 or email via their Localiiz Profile Page.


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