Kitabı oku: «Love Is Not Enough: A Smart Woman’s Guide to Money»

Contents

Title Page

Dedication

Introduction

Section 1: Finding the Money

1 Maximizing Your Income

2 Spend Less, Have More

3 Debt

Section 2: Using the Money

4 Saving

5 Investing

6 Pensions

7 Buying a House

8 Marriage

9 Children

10 Divorce

Section 4: Beyond the Money

11 Money

53 Money-Saving Tips

The Final Checklist

Useful Websites

Index

About the Author

Copyright

About the Publisher

Introduction

For most of my twenties, when I thought about my future, I imagined all sorts of delightful things. Country houses and sunshine, long weekends by the Italian lakes, Christmas in the Caribbean, happy children riding brand-new bicycles, lazy mornings drinking coffee in cafés and sparkling-glassed conservatories, a wardrobe full of high-heeled shoes and cashmere jerseys, sports cars and speedboats. But the one thing I never thought about was the path from my current life to this new one.

How was this splendid future lifestyle to be financed? Would I inherit a few million from a distant relative? Win the lottery? Suddenly see my good career change to a great one as I started and quickly sold a fabulous small business or was promoted so far so fast that my salary and million-pound bonuses would take care of it? Or was I perhaps hoping for another kind of facilitator of the future? I think that a part of me – despite a strongly feminist upbringing – couldn’t help but assume that my fantasies would be paid for by someone else. By my very own Prince Charming. My truth is that deep down, despite love of my own career and pride in my financial independence, I long thought of the day when I would meet the man I intended to stay with for ever, the one who would be the father of my children, as the day most of my problems would end. Not only would my emotional burdens be shared but I would no longer have to worry about pensions, the housing ladder, savings, the stock market, bills and the like. I’d keep working and earning of course, but my Prince Charming would take all those boring things off my plate and chuck in a shopping allowance as a bonus. Yes, as far as I was concerned money was a man thing.

So I didn’t really worry about it that much. I made good money and did the bare minimum to look after it – I tried to keep out of debt, made sure I saved a little money and got the cheapest mortgage I could find when I bought my flat – but long-term planning? None. In my twenties I earned a generous salary at an investment bank. But when I resigned at 29 I had almost nothing to show for it (except for many, many pairs of shoes, long-term sleep deprivation and a heroic tolerance for alcohol). While I was working I wasn’t leveraging my earnings into long-term financial independence. I was effectively starting my financial life from scratch each month. Sound familiar?

Prince Charming isn’t coming

I’m not alone in having spent much of my adult life hoping for, worse, planning for, a let-out clause. A survey of all my (many) sisters and my friends, independent career women every one, shows that almost all of them, loath as they are to admit it, feel the same. They all know how they’re paying for their next holiday but very few of them have any idea how their retirement might be financed. Why? Because they assume that they won’t be financing it themselves. Someone else will. A recent survey by National Savings and Investments showed that 45% of women say that a healthy bank balance is their top priority when looking for a partner. Only 22% of men said the same. The women also said that a man didn’t become desirable until he was earning £50,000; they expected men to have hefty stashes of cash for them to spend – they assumed that potential partners would have an average of £24,000 in savings. The men surveyed expected partners to have only around £15,000 saved up.

There is nothing wrong with hoping for a financial let-out clause, be it a lottery win or a rich husband (neither are intrinsically bad things, in fact they are both rather good things). The problem comes when we put too much faith – consciously or subconsciously – in the idea that our financial futures will be sorted out by this kind of external force. Because the odds are they won’t be.

Let’s look at the lottery. Imagine a huge room filled to the top with 10,000 books. In one book, on one page, inside one O in the middle of a sentence somewhere, is a tiny dot. You have a pin. You must choose a random book. Then you must close your eyes, open the book and stick the pin in it. It is about as likely that you will hit the dot as it is that you will win the lottery in any one week. Indeed the odds of you winning the lottery are so low that they are pretty much the same whether you buy a ticket or not. That’s not really something to depend on.

And nor for that matter is Prince Charming. He may well turn up – many, maybe most, of us find real love in our lives in the end – but when he does he probably won’t be quite what you had in mind. Your PC could be poor himself. He could be a high earner who is useless with money. He could be only a short-term PC – you could leave him or he could leave you. Let’s not forget that nearly 50% of UK marriages end in divorce. Either way you can’t rely on either his arrival or his long-term support. Love is a wonderful thing but rare is the woman who finds that it comes with a full cheque book.

Even if it does, you do need to ask yourself if you really want to leave yourself dependent on a man for money for ever. I used to think that it would be just fine, but I don’t any more. I’ve been working and taking care of myself for over a decade and I don’t think I could be happy constantly having to ask someone else for money. When I was on honeymoon my debit card suddenly stopped working for no apparent reason, leaving me totally without cash and dependent on my husband for the two weeks we were away. The honeymoon was a gift from him to me so being cashless presented no major problems. It did, however, give me a hint of what it might be like to be dependent in less romantic conditions. When you’ve only been married a few weeks it isn’t hard to ask your husband to give you money to buy some postcards but would you really want still to be doing it after ten years of marriage? I get 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 lot of the financial journey this book travels myself. I’ve been a student, I’ve done years 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 is now getting one so you aren’t going to get paid much of a premium for having one too. In fact, according to the Higher Education Statistics Agency, a good 25% of graduates now go into jobs that didn’t require them to have degrees in the first place: more are working in low-paid office administration jobs and customer service jobs (27%) than in ‘professional occupations’ (25%). Recent research also shows that the average graduate (male or female) now has to wait until they are 33 – that’s after 12 years of full-time work – for their earnings to overtake those of someone who skipped university and began work at 18. I’m not sure this should particularly surprise us. After all, most of us learn little of vocational use at university and the traits that employers value most are rarely teachable. When the Council for Industry and Higher Education last year asked 45 top businesses what they were looking for in employees the most common answers were ‘innovation’ and ‘the ability to think creatively’.

I once interviewed a charming young man with a good degree from a top university for a writing job at Moneyweek, the magazine I edit. A lot of what we do at the magazine is précising material from other publications so I asked him to précis a piece for me in order to check both his comprehension and his writing style. When I got his effort back I found it quite confusing: his article seemed to tell only half the story and came to no real conclusion. I dug out the original to check what had gone wrong. It soon became clear. The article I had given him to summarize was on two sides of one piece of paper. He hadn’t turned the piece of paper over. University not only didn’t teach him to think creatively. It didn’t teach him to think at all. In contrast, a year or two later I hired as my deputy editor a young woman who had not been to university. She was several years younger than most people I would have considered for the position (having three years more experience than most people her age) but I could see no difference between her skills and those of the many others (all graduates) who I interviewed for the job.

Given all this, it’s worth thinking very seriously about whether university is really for you, particularly with tuition fees now coming in at £3,000 a year and most students leaving university with upwards of £15,000 worth of debt (you don’t pay the fees until you graduate). If you can go to a top university and get a top degree odds are it will turn out to have been worth the effort, but if you are going to a low-grade university and expecting to get a third is it really worth the bother?

If you decide the answer is yes one of your main priorities (only just behind making sure you get at least a 2:1) is to get through the whole thing with as high an income as possible in order to run up as little debt as possible. Students from particularly needy families (annual income £17,500 or less) can get grants worth up to £2,700 a year in 2006–7, while everyone is entitled to cheap student loans of up to £4,405. These are far and away the best way to borrow, given that the rate is well below that on any other kind of debt and you don’t have to start paying the money back until your income hits £15,000 (see www.slc.co.uk for details of student loans). Otherwise there are hundreds of different grants, bursaries and scholarships about. A full listing of all the bursaries and scholarships on offer can be found at www.ucas.com, the website for the Universities and Colleges Admission Service. Note that a survey last year showed that 95% of students about to head for university knew nothing of the money on offer. This is excellent news for those who bother to find out: the fewer people who know the less competition there will be for the funds and the more there will be for those who have done some research.

Finally, you might need to think about working while you are at university. However this does need to be kept to a minimum. If you think you are working too much to study enough to get your 2:1 stop working: you don’t want to end your three years with nothing to show for it other than a skilled pint-pulling technique.

This sounds outrageous and it is. But the really nasty thing about it is that to a large degree it is our fault. Study after study shows that women are paid less not because their bosses are actively discriminating against them, but because they never ask for more. In 2006 Grazia magazine surveyed 5,000 working men and women, asking them about their pay and their thoughts on their pay. Two-thirds of the women who took part said that they had never asked for more money, despite the fact that 80% of them also said that they thought they were underpaid and to a degree overworked (50% of the men surveyed said they took a full lunch hour every day whereas 25% of the women said that they never took a lunch break at all and 61% said they never took full lunch breaks). Only 29% of the women surveyed said they had ever plucked up the courage to ask for a rise and of those, said Grazia, half claimed it was one of the most ‘stressful and embarrassing things’ they’d ever done.

Linda Babcock and Sara Laschever, the US authors of Women Don’t Ask, point to research showing that men initiate negotiations four times as often as women and that, unlike the women surveyed, who said negotiating was like ‘going to the dentist’, the men said they found it to be like a ‘wrestling match’. Men find negotiating exhilarating. Women find it humiliating. So much so that when they do force themselves into asking for a rise, say Babcock and Laschever, they do it so badly they end up with 30% less than men in the same circumstances.

So why do we find asking for money so hard? It seems to come down to a different method of self-measurement. Women assume that if they were worth more than they are paid, their boss would pay them more automatically, so they don’t ask. To do so would be embarrassing; it would be to suggest that work and the relationships formed at work are not satisfying in themselves but that they have a set monetary value. We also think it might somehow be rude and adversely affect our relationship with our boss – it’s an emotional thing for us. We think that pay levels should automatically be fair (just like A-level grades) and if they aren’t we are too nice to demand that they should be made so.

I’m guilty of this myself. Like many other women, I think a part of me feels I’m somehow lucky to have my job (rather than that my employers are lucky to have me) and that if I ask for more money anyone employing me would be entirely justified in telling me that I can empty my desk and be off – they can find someone else who would be thrilled to have my job on any salary with no trouble.

Men are different. They internalize their confidence more. They don’t need to be loved by their colleagues or their bosses and in general they don’t feel lucky to be allowed to work. Most of them are clear about the fact that they work mainly for money (and the status that brings) so they take a view on what they are worth and insist on having it. They can separate their view of themselves as a person from their idea of how they do their job and what they deserve as a result. Women think about their weaknesses when they negotiate. Men think about their abilities. Women self-deprecate. Men demand and then revel in praise and the status it brings. They ask more so they get more.

“Remember Ginger Rogers did everything Fred Astaire did, only backwards and in high heels.”

Ann Richards, governor of Texas 1991–1995

Those in any doubt that those people who ask for more get more should take note of a survey out from Woolworth’s just before Christmas the year before last. It pointed out that on average parents spend just under £100 more on Christmas presents for their sons than for their daughters. Why? The answers from the parents surveyed should give every woman in the country something to think about: boys ask for more presents, and the presents they ask for tend to be more expensive (the most expensive toy in the top five for girls that Christmas was the Amazing Amanda doll at £69.99, for boys it was the PlayStation Portable at £179.99). Girls also asked for smaller presents that they can ‘love, care for and collect’ said the Woolworth’s spokesman. They ‘keep their toys for longer and are not so demanding for the latest craze’. Boys, on the other hand, ‘always ask for the new toys as soon as they are released’.

And, just to ram the point home, the parents surveyed said that if they didn’t get what they wanted their boys got nastier than their girls.

The point is that self-discrimination starts young. Women don’t ask for enough often enough. The result? They get stuck with cheap dolls when they are 9 and then rubbish salaries when they are 29.

This kind of thing matters. Imagine that a man and a woman are both offered a job at the same time at the same place. The offer includes a starting salary of £25,000. The woman takes it. The man negotiates it up to £28,000. Thereafter they both get 5% pay rises every year over the next 30 years or so. How much more do you think he will earn over his career than she does?

The answer is a shocking £285,000. And that’s a minimum number: if the woman accepts the 5% every year but the man pushes it up a little more at each annual review (don’t forget men initiate negotiations four times more often than women) he will end up with even more. A quarter of a million pounds is many times more than the average person’s net worth will ever be but women throw that kind of money away every day simply by being too embarrassed, too shy and, let’s face it, too foolish to ask to be paid what they are worth. So next time you think that you’re lucky to have your job remember that, if you aren’t paid the market rate, you aren’t nearly as lucky as the employer who has managed to get you to do the same work as the man at the next desk for less money.

All this means that you must have your wits about you in the workplace. There are many ways to make yourself better off – and we’ll be looking at many of them later in the book – but the simplest way to get richer in a hurry is to make sure you are getting paid what you are really worth. Once you’ve done that you can start working to turn that stream of income into long-term wealth. But first you have to ask for more money and the sooner you do it the better.

Here’s how to go about it.

Eleven ways to get paid what you are really worth

1 Get the knowledge. Find out how much other people in your line of work get paid. When I started in journalism I made a point of asking a friend senior to me in the business how much she earned and how much she thought I should earn. Now she always tells me everything she knows about pay standards in our industry and I tell her. Also visit recruitment websites or call a recruitment consultant. If you feel able to ask colleagues what they make go ahead (a few drinks might help here). Next visit www.paywizard.co.uk (it doesn’t give much detail but it will help you to see the range of pay on offer for jobs similar to yours). Finally, get your personnel department to show you the firm’s pay data. You can’t ask to see what individuals are paid but you can see a breakdown of pay by sex, which might help your case a little. Knowledge is power – no one can argue with you if you have the right facts to hand and you have a good case.

2 Do your own PR. Women aren’t programmed to shout about their achievements in the same way that men are but the more you let people know both that you exist and how well you are doing the more they will remember you. Perhaps you can keep your boss aware of your progress on a weekly basis. I don’t mean going into their office at the same time every Friday to bore them with the details of how special you are, I just mean that you should make sure that every week they are copied in on an email that makes you look good or that you regularly mention any positive feedback from colleagues or customers. You also want to be sure that you aren’t overlooked. You need to speak up in meetings whenever you get the chance (even if you aren’t convinced your contribution will be an exceptionally good one – when did that ever stop a man?). When the time comes to ask for a rise collect evidence to show that you do your job adequately. It’s nice if you do your job particularly well but you only need to do it averagely to get paid the going rate for it. Also make a list of any achievements, especially if you can show that they have affected the firm’s bottom line (in a good way) and get together any comments or letters of praise or thanks from suppliers or clients. Then take them all in with you. Remember that a key part of doing well – of being promoted and of being paid more – is self-promotion. Don’t ever be too modest. When you were at school if you worked hard you automatically got As. But this isn’t school and there is no exam that tells people what you should be paid. You have to tell them yourself.

3 Be objective. Forget how much you feel you are worth. This isn’t about your self-esteem; it’s about an objective assessment of your market worth. And asking for more money isn’t rude. It’s perfectly normal.

4 Don’t wait too long. There’s no need to wait for an annual pay review. You can ask for more money at any time. The worst that can happen is that the answer will be no.

5 Begin as you mean to go on. When you start a job don’t accept the first salary offered. Immediately try to bump it up a bit. The higher a base you start from the faster your salary will rise.

6 Start high and expect to be argued down. Know what the minimum you will accept is before you start negotiating.

7 Never threaten to resign unless you really mean it. If you don’t get what you want and you then don’t resign your position will be permanently undermined.

8 Don’t assume no means no. Ask for another review in six months. Also consider asking for non-cash options – perhaps more training or more flexible hours, time off to study, or a day working at home. Ask if you can be sure of a pay rise if you hit particular targets; ask to have set objectives you will be judged against.

9 Ask on a Wednesday afternoon. A recent survey from Office Angels found that four out of five employers are at their most receptive to pay demands in the middle of the week and in the afternoon.

10 Use the law. If you really think you are paid less than a man for broadly similar work and none of the above has worked you will need to take it further via the legal system. Under the Equal Pay Act you can write to your employer asking for information to help to establish if you are getting equal pay and if not why not. Download a list of the questions you can ask from the EOC website on www.eoc.org.uk. If you remain convinced you are being discriminated against but your employer still refuses you a rise, write a letter of grievance to them. Wait 28 days for a reply. They should then set up a meeting to discuss the situation. You can take a union representative or colleague with you. If your grievance is not upheld you can and should then appeal against the decision. If this too doesn’t work you can, as a last resort, go to a tribunal. Get advice on it from the EOC and the independent Advisory Conciliation and Arbitration Service (www.acas.org), which tries to settle claims. In 2002–3, 17,000 women took their employers to a tribunal. There is one final thing to say on pay and discrimination. Do not ever go to a tribunal or threaten your employer with a tribunal if you don’t have a good case but just hope you might get a cash payout. It isn’t good for any of us.

11 Never be afraid of being called a feminist. Too many people think that being ‘pushy’ in the office will end up with them being labelled a ‘feminist’. And too many people think there is something wrong with that. According to a poll commissioned by the women’s rights organization Womankind Worldwide in 2006, only 29% of UK women are happy to be called feminist these days. This is an outrage. If you agree with women having the vote, having equal rights in the workplace and at home, getting as much say over the family car as a husband, being free from domestic violence and rape and so on then you are a feminist. Anyone who says they are not should take a step back and remember that the world of opportunity they live in was created for them by the women who invented the word – and suffered for it. We do them a great disrespect to deny their label. I’d be horrified if anyone suggested that I was not a feminist.

Being worth more

So far we’ve just been looking at how to get paid what you are really worth. But you can also look at this the other way around: if you want to get paid more perhaps you should make yourself worth more. You are selling yourself in the labour market. Within that market there are a lot of ordinary people. They can all type, can all do basic administration, can all answer phones and so on – they can all do low-paid commodity-style jobs. So if you want to get paid more than them you have to have skills they don’t have. You can do this formally. It is generally accepted that the better educated you are the more you will get paid and in the case of professional qualifications that is absolutely true. As a doctor or a lawyer, an architect or a web designer the better your qualifications and the more of them you have the more likely you are to be able to find the best and the best-paid jobs in your sector. You also need to be sure that you keep upgrading your skills – don’t be the last person in your office to learn new IT skills; be the first, for example.

But if you like your job you will also accrue value as an employee informally – being engaged and enthusiastic makes you of more worth to your employers than being bored and disengaged from your work. So ask yourself this. Do you like your job? Does it make you happy? Do you actually want to do it? Too many of us just drift into our first jobs and then end up stuck in them or variations of them for ever whether we like them or not and whether we are particularly good at them or not. This makes us disconnected, something that stops us learning or moving ahead – who wants to promote someone who is clearly bored with her career? If you take a job you are genuinely interested in, however, you should find that you are excited by it, that you learn and grow on the job, that you understand how the company you work for operates and what it needs from you. This makes you valuable and it makes you promotable. The upshot? If you do something you enjoy you are more likely to become good at it and hence to be paid more for doing it. So think about the bits of your job that you really like, do more of them, do them better and make sure everyone knows you’ve done them better. A rising salary should be the reward for that time and effort.

Three other ways to make more money

Changing career

What if you’ve done everything you can to get paid the going rate in your current job and you still don’t feel that your income is high enough? The obvious thing to do is to change jobs. When someone offers you a new job they usually offer you 5–10% more than you are currently earning (otherwise, unless you were deeply unhappy in your old job for non-financial reasons, why would you bother moving?), which not only bumps up your current salary but bumps up the base from which it will be increased in future pay rounds. But more promising as a long-term tactic than moving jobs within your industry might be to consider changing the kind of job you do.

For all the wrong reasons much work remains effectively divided into women’s work and men’s work. Women are nurses, child carers, beauticians, primary school teachers and shop assistants. Men are plumbers, train drivers and construction workers. And guess what? Yes, all the traditional male jobs pay significantly more than the traditional female jobs despite the fact that the skill levels required can’t be considered that different. Do you need more skills to drive a train than to teach a class full of 30 five-year-olds? To build a wall than to take blood from an elderly cancer sufferer? I don’t think so. None the less this kind of pay discrimination exists right up to the top of the career tree: an article in the Financial Times recently pointed out that the work of (mostly female) clinical psychologists and (mostly male) psychiatrists overlaps significantly, yet the former are generally paid less than the latter.

What they earn

Cherie Blair (lawyer): £ 200,000

Lily Cole (supermodel): £ 2 million

Anna Wintour (editor of Vogue): $ 1 million

Stella McCartney (fashion designer): £ 669,000

Davina McCall (TV presenter): £ 1 million

Kirsty Young (newsreader): £ 500,000

Laura King (beauty therapist): £ 11,000

Louise Hitch (personal trainer): £ 20,000

Inge Mecke (trainee solicitor): £ 29,000

Alessandra Sartore (executive PA): £ 35,000

Rachel Dodd (care assistant): £ 13,000

Zoe Baglin (occupational therapist): £ 18,500

Helen Pike (teacher): £ 37,000

SOURCE: Grazia

You’ll clearly be fighting a losing battle if you are a beautician (paid around £18,000) and want your employer to pay you a construction worker’s salary (more like £35,000), so the best way to earn more is simply to switch over. There is currently a huge shortage of skilled labour – bricklayers, decorators and carpenters, for example – in central London, yet there are so few women in the business (around 1% nationwide) that when an all-women team turned up working in the capital the story merited a full-page article in London’s Evening Standard (headline: ‘CHICKS AND MORTAR’). I’m not suggesting that we all take plumbing courses, just that we look around us and wonder if the industry we are working in is the best one for us over the long term.

Getting a second job

The other obvious way to boost your income in a hurry is to get a second job. Second jobs are usually low paid and boring – waitressing, Saturday shop assisting, cleaning and the like – but if you pick them right they can also occasionally offer you experience that can take your career to another level. One of my first jobs was working as a researcher at a Japanese television station. My fellow researcher (Riko) had a second job doing the same at MTV in the evening. She ended up becoming an MTV video jockey specializing in hip-hop music and then a bigwig at a large record company. Still, that kind of thing doesn’t happen very often and for most of us the main problems with a second job are not, as they were with Riko, hoping that our main employers don’t see us on TV and fending off fans when out for dinner, but getting enough sleep and making sure our tax affairs are in order.

The tax thing is boring but important. You will need to tell both your current employer and the Inland Revenue that you have a second job so that both your income tax and your national insurance can be correctly calculated. There is, for example, a limit on how much national insurance anyone has to pay on their salary so with two jobs – and two employers deducting it on behalf of the government – you could find yourself paying too much and then having to claim it back by filling in your own tax return. You also need to make sure you are paying the right amount of income tax. You get a personal allowance (an amount of income you don’t have to pay tax on) every year (£5,035 in 2006/7) but if you don’t let your employers know about each other you may find that they both give you the allowance, leaving you with a large bill to pay to the Inland Revenue later. If your second job means your total income is high enough to make you a higher rate income tax payer yet both your employers are only collecting lower rate payments the same could also be true. Make sure your employers know about each other and get you the right tax codes if you want to avoid any difficulties (see the Inland Revenue’s website, www.hmrc.gov.uk, for more on this).

Finally, before you take on a second job do make sure it is both possible and really worth it. Working two jobs isn’t easy so ask yourself a few things before you commit yourself to it. Will your main employer allow it? Many companies explicitly say in their contracts that employees are not allowed to take on any outside work at all, so, while you may think you can get away with it simply by not telling your main employer, taking on a second job might put your first one at risk. Do the sums really add up? You may need childcare, which could eat up much of the extra income, and if you are on any benefits you will find that as your income rises they fall. Making your own money rather than relying on the state (and effectively the largesse of other tax payers) sounds good in theory, but in practice it can be a tad exhausting. So check what will happen to any benefits or tax credits before you head out to work a second job.