SMUG MONEY: Holidays, make-up, a decent retirement… women can have it all

Written by Rebecca O'Connor on 20th September 2017

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Young women are more likely to be saving money for a two-week yoga holiday in Bali than they are for their own retirement, according to new research.

The findings, from Alliance Trust Savings, found that while the top financial priorities for both older and younger women are mortgage or rent payments and day-to-day essentials, the third priority for over 35s is saving for retirement. But for under 34s, that comes fifth on the list below saving for a holiday and saving for emergencies. For young men, retirement comes third after mortgage or rent and day-to-day essentials and for older men it’s the top financial priority.

Separate research published this week by FalseEyelashes.co.uk suggested that women spend an average of £18,000 on make-up over their lifetime.

I bring these two bits of research together not to go all Daily Mail sister-bashy, women are a superficial, fickle bunch of spongers, on you, but speaking as a dedicated make-up wearer with a preference for expensive varieties, to ask, genuinely, if our financial priorities could do with a bit of reorganising.

Here is the problem as I see it: we need holidays – for sanity, for peace, for family time and for health, and many of us consider that we also “need” make-up, to a greater or lesser extent and whether that is right or wrong (no judging here – either of the bare-faced beauties or the foundation fans). Funding retirement is another need.

So we just have too many perceived needs to meet with a static pot of cash, and what happens in that situation is that the short-term needs, which appear more pressing at the time, tend to swallow up that cash first.

£18,000 is a lot of dosh that would be jolly nice-to-have in retirement. Does that mean I am going to give up wearing make-up? No. Because when you are making hundreds of tiny spending decisions each month, trade-offs such as this do not appear as starkly. It is not so black and white – there are always endless opportunity costs to any financial decision we make, and our brains can’t cope with performing cost benefit analyses for all of them, every day.

In honesty, what I will take from this research is that I must try to earn more money so I can afford everything I want – the nice retirement too.

Many of us think this way, assuming we will earn more tomorrow to avoid cutting costs today. It’s not an entirely daft approach. Earnings do tend to rise with age. But so too does the risk of having to give up work, losing jobs, ill health, etc etc. The longer you leave it, the more you are leaving to chance. And what if the worst happens before you’ve had a chance to build anything of a retirement pot?

Those nice hols and posh make-up might then seem regrettable – but the truth is it’s unlikely we’d blame our earlier spending if we found ourselves impoverished in older age. We’d probably just think we should have earned more. But by then it will be too late, which is why it’s always a good idea to set aside something, no matter how small, for your retirement, as early as possible in adult life as you can manage.

Which brings me to my personal, current, totally related spending dilemma. I have run out of volumising oil. Can I live without a tube of £15 Percy & Reed Volumising No Oil, Oil? Do you know what? I don’t think I can. Because it makes my hair look utterly fabulous and in an appearance-based world, I think I can pretty much justify spending money on make-up and hair oil now, as an investment in my “aesthetic capital”, whatever that is.

But I know the opportunity cost of this will not be my long-term savings. It would be another item I would buy. I know that because every month, £300 of my hard-earned pounds go into pensions, and £200 into ISAs, before I spend money on anything else. That’s some whack of savings every month, which happens automatically, soon after pay day. I’ve organised it like this so I absolutely cannot be tempted to spend my savings. Because I would, I’m not that strong.

So yes, I can justify buying that hair oil, because I can be safe in the knowledge that if the money is there after my savings have come out, it can be spent. Even if it could have been spent better, on something more useful.

Also, I’m self-employed, which comes with its own financial issues such as erratic cash flow, but does mean there is more flexibility to try to earn more if you really want to. Some months, I might be able to afford hair oil, others, I might not. But I will always save a bit for retirement every month, unless, God forbid, I didn’t earn anything at all one month, because I’ve got direct debits set up and I don’t need to think about it.

I do feel a bit cash-strapped all the time as a result of saving so much every month. I sometimes wonder whether I should cancel those direct debits just for a couple of months and have a bit more fun. It does make it more difficult to afford holidays and posh make-up. But I can still manage all of it – just. You can too – don’t let anyone tell you different.

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