Читать книгу Love Is Not Enough: A Smart Woman’s Guide to Money - Merryn Webb Somerset - Страница 7

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.

Then you might think about whether you could look at your income equation the other way around. A study from Liverpool Victoria last year showed that over 40% of those with second jobs had taken them not to pay off debts or save for something special but just to meet their living expenses. However, perhaps instead of boosting your income to meet those expenses you could simply reduce the expenses. You probably think you can’t cut down, but most of us overspend, be it on shoes or insurance. A little time spent concentrating on cutting our costs can improve life immeasurably more than spending Friday and Saturday nights stuck behind a bar – and usually a lot faster too. See the next chapter for more on this.

Start your own business

All the things we’ve discussed in this chapter so far have been about how to increase your income in a marginal sort of a way – about adding 20% rather than about multiplying it by ten. But most of us secretly hope for a great deal more than that: we dream that one day we’ll be rich. Ideally, we’d like this to happen without us having to make much in the way of effort. That’s why every week 14 million of us buy tickets for the National Lottery. Sadly, playing the lottery is an absolutely hopeless way to get rich: every week about 13,999,999 of us don’t win a penny. So what’s a better way? A more realistic answer is to start your own business. One million women in the UK are self-employed and women now own a third of our small businesses. Following their lead isn’t easy and it certainly isn’t foolproof: a large percentage of small businesses fail in the first year and another large percentage struggle on for a few more years without ever making real money. But some will hit the big time.

Remember the story of the Body Shop? Thanks to having the right idea at the right time and working relentlessly to make her dream a reality Anita Roddick is now a millionaire many times over. The same is true of Julia Pankhurst, founder of Friends Reunited, a social networking website valued at many millions of pounds. And these extreme examples of success aside, there are thousands of other women around the country making good livings from their businesses.

One is my sister Tabitha. She has always found working for other people tricky and long had dreams of running her own company. So three years ago, at the age of 28, she started doing just that and launched her own accessories firm called Tabitha. She designed a collection of handbags, got them made up at a factory in east London and then spent the next few months schlepping from trade show to trade show selling them. Selling is one of the things she does best and within months she was deluged with orders. Today her bags are on the arms of many a celebrity (Danni Minogue is a big fan!), she manufactures her products in China and Brazil and her turnover in 2005 was nearly £750,000. She’s done extremely well and done it very quickly but, as she says, it really hasn’t been easy and it still isn’t – she seems to hit a new business-related crisis of some kind every week. For the last two years she has worked every hour possible; she has barely seen her friends and family; she hasn’t had time to have a proper boyfriend; and she has had to cede custody of her cats to an old flame as she has no time to look after them. Starting and running a small business is, she says, the hardest thing she has ever done and no one who isn’t ‘truly passionate’ about their product or idea should even consider following in her footsteps.

Her words are echoed by Caroline Bennett. Twelve years ago, Caroline, now 40, raised £90,000 and opened a sushi bar called Moshi Moshi in Liverpool Street in London. Years of hard slog later she has two more restaurants. Moshi Moshi turns over nearly £3 million a year and produces profits of several hundred thousand pounds a year. Smaller scale, but getting there, is the firm launched in 2001 by Australian Ashe Peacock. Antipodium is dedicated to Australian fashion with a shop in Soho but Ashe also does PR for Australian brands in the UK and wholesales their products into other retail outlets here. She now has eight staff in London and turns over a few hundred thousand pounds a year.

So how can you have a go at following in their footsteps? I’ve asked Caroline, Tabitha and Ashe for their top tips and summarized them below.

1 Don’t start a business unless you really want to do it. If you don’t want it enough you won’t be able to cope with the long hours, the financial difficulties and the utter lack of time for anything not related to your work. It just isn’t enough to like handbags to start a handbag business and liking sushi isn’t enough to give you the drive to launch a restaurant chain.

2 Research, research, research. Your idea may sound good to you but is there really a gap in the market? Make a proper business plan showing exactly how you imagine your project will develop. How big is the market? Who are the competitors? How big can you grow? What are the potential weaknesses? What are the costs likely to be? ‘I didn’t do a proper business plan,’ says Tabitha. ‘I thought I’d just figure it out as I went along. Big mistake. Without set targets and proper pre-planning the business was a huge mess by the end of the first year.’ NatWest has a free online advice programme to teach entrepreneurs about planning and conducting market research. See www.natwest.com/newbusiness.

3 Get all the advice you can. If you go it alone you have a 40% chance of succeeding but if you join a mentoring scheme of some kind those odds improve to 50%. But never forget it’s your business. Everyone has an opinion and likes to offer advice, says Tabitha. ‘Listen but stay focused on what you want and go with your gut instinct.’ You’re the one who will end up dealing with the consequences of your actions so all the final decisions have to be yours.

4 ‘Take full responsibility for everything,’ says Ashe. If you start a fashion business ‘you don’t just get to play around with dresses’. You have to understand all the boring bits too. If you don’t do your own book-keeping you won’t make it. ‘I’ve learned the hard way that no one else will do things as carefully as you, so you have to be qualified to supervise everyone who works for you on every level.’

5 Understand that employees and friends are different things. However much you convince yourself that having friends working with you or for you will work, says Tabitha, ‘it just won’t – ever’. Managing staff isn’t something you think about when you first start up but if you have any success at all you won’t be working on your own for long. Then hire very carefully. Once hired, staff are hard to get rid of, ‘and in a small company politics can be so destructive’. ‘Business is about the people you employ,’ says Ashe and it is hugely challenging learning ‘how to be a leader while being fair and allowing people the freedom to make their jobs as interesting as they want them to be’. Remember too that you have to support them but they won’t support you: ‘The boss gets no support from anywhere: people assume you don’t need it.’

6 Be nice to your bank. An understanding bank manager will make all the difference when you have cash-flow problems. And you will have cash-flow problems, says Tabitha. Lots of businesses look great on paper but go bust anyway when they run out of the cash they need to deal with day-to-day expenses. Small fashion businesses collapse every day thanks to department stores not paying them for months after their wares have been sold, for example. See www.payontime.co.uk for advice on making the big boys pay you what they owe you.

7 Use the Internet. Web-based businesses can start smaller and use less capital than others. Eighty per cent of the businesses in the UK run by women have a website and it’s essential that you too have an online presence. A good website doesn’t come cheap, says Tabitha, but it is the most important part of your branding: get it right and it will be the best investment in yourself you ever make.

8 Remember size isn’t everything, says Caroline. If you have started the business looking for the status and recognition that come with having a well-known brand that’s one thing, but if it’s financial freedom you want you may find that you are better off expanding slowly, or if you are doing well being small just staying small. A small company offering a good regular income is better than a large one making losses.

9 Don’t get too hung up on looking for grants. There are around 3,000 different types of grant available to small businesses – from the government, the EU and various other support bodies (see www.businesslink.gov.uk) – but most small business owners say that the red tape and form filling take up so much time and energy that it simply isn’t worth bothering to apply for them.

10 Remember that you will have to take risks. Being an entrepreneur is uncomfortable and working hard alone won’t guarantee success. You’ll need creative thinking and luck too. ‘You can’t assume that the people you do business with will be honourable,’ says Ashe. ‘Anything that can go wrong will.’ ‘You are always the last to get paid,’ says Tabitha, ‘so if you need routine and security, don’t do it – entrepreneurship isn’t for you.’

11 Don’t let yourself be discriminated against. A recent study by Warwick University showed that women starting a business pay up to 1% more a year for their start-up loans than men. They also borrow much less: an average of £6,100 against £18,500 for men, says the Association of Chartered Certified Accountants. There are many perfectly rational explanations for this (perhaps women tend to start riskier businesses) but it’s worth bearing in mind – most bank managers are, after all, men.

Scams: the ways you won’t make money

When you need money badly it’s tempting to fall for one of the many get-rich-quick schemes about, particularly as so many of them sound so very plausible. But like most things when it comes to money, dealing with scams is a matter of common sense. All you have to do is remember this: when it comes to money, when something sounds too good to be true it always is. There are no exceptions.

The Avon Lady and Ebay: Selling in your spare time

I remember the Avon Lady coming round when I was a little girl. She had cases and cases full of wonderful coloured smelly goodies and my mother, after a good rummage through and a bit of a gossip, would occasionally buy a lipstick or two from her. But who would have thought that in today’s Internet age the Avon Lady would still exist? Well, amazingly she does. Christianne Randolfi became an Avon Lady by default. She used and wanted to keep using the products (Avon aren’t just about lipstick these days – you can buy anything from foundation to knickers to jewellery from your local representative) so she signed herself up as a sales rep. Now she sells to her friends and local acquaintances in a small way, putting in an order for around £70 and making roughly £10 for herself each time. Could she make more? Easily she says. A few very elite Avon Ladies are said to make six-figure incomes from the firm, but she’s happy to earn enough just to pay for her own cosmetics. Contact www.avoncompany.com for more information.

Still, something tells me that Avon Ladies aren’t the wave of the future. If I were looking for a way to make a bit of extra income out of a few hours a day I think I would turn to eBay, the auction site where anything can be bought and sold to anyone. For inspiration take the case of Caroline Brown, an eBay trader who specializes in clothes. At 61 years old she has a lifetime of knowledge about fashion and fabrics behind her, so she visits charity shops all over the place, buys the good stuff and then auctions it on eBay. Does she make any money? You bet she does. As an accomplished dressmaker in her own right Caroline can separate the good stuff from the dross in seconds (‘it’s all about the cut and the fabric’) and while it is true that vintage clothes are all the rage and the pickings are thinner than they were even five years ago she says there are still plenty of bargains about: a piece of quality high street clothing that retails at £75 will probably sell for a tenner in a charity shop and £20 or so on eBay. That means that if you have a good eye, says Caroline, and you can shift ten or so items a week you could make £100–£150 a week relatively easily; she’s sold her wares to people in the US and in Japan as well as to residents of the Outer Hebrides (who haven’t much access to high street shops) and to a pub landlady in Wales. Caroline suggests looking in particular for the labels everyone knows – French Connection, for example – when you start out, as they are easiest to sell.

But eBay isn’t just about fashion: if you want to do well on it you have to work with what you know. Suzette is very knowledgeable about books. She spends her spare time combing car boot sales, markets and country auctions looking for deals that she then sells on eBay. Sometimes she makes only £5 on a trade but sometimes she strikes it lucky too: she once sold a Kylie Minogue magazine supplement to a man in Florida for £85 and a rummage through a skip in Finchley provided her with £1,000 worth of sales in rare classical music books and RAF memorabilia. Overall, she has found that with a little concentration she can make up to £1,000 a month trading books. Suzette is a single mother so this is a very useful extra income for her. Carlotta isn’t a very active trader, but everything she needs for her two children is bought and sold on eBay: when she needs a new pram she saves money by getting it second-hand on eBay and when she doesn’t need it any more she claws the cash back by reselling it on eBay too. Below are Carlotta, Suzette and Caroline’s five top tips for doing well on eBay.

 Get all the relevant information about your product into the descriptive title. People won’t search under the words ‘stunning’ or ‘fabulous’ but under ‘skirt, green, size 12’. Suzette says she’s even made money buying things on eBay that had been badly listed and then reselling them.

 Try to have all your auctions end at the weekend, preferably on Sunday evening as that is when eBay is busiest and people have time to watch the items they want properly.

 Always overestimate rather than underestimate the postage costs – losing out here can be very irritating.

 Try to have everything sent by recorded next-day delivery. Most people are prepared to pay the extra for it and it means that you can keep track of your items and keep your feedback 100% good (everyone you deal with can rate you on eBay and if your feedback is less than around 98% good you’ll have trouble selling stuff).

 Be nice, be efficient and be scrupulously honest. On the Internet your feedback ratings (a proxy for your reputation) are the most important thing you have.

“A large income in the best recipe for happiness I ever heard of.”

Jane Austen

The most common scams often have something to do with pyramid selling. These are effectively schemes that have as their sole purpose signing up other people to the scheme. You may be told that it is a sales company and that once signed up you will be making your money by selling cosmetics or drinks or some such but once you have handed over your ‘membership fee’ you will find that making money from the sales is no easy business. Instead the money is in signing up others. And you won’t be able to do that – it takes a particular kind of high-pressure sales personality to get other people in and most of us don’t have it. When I was in my early twenties I was persuaded to join a skincare products ‘multi-level marketing’ company (MLM is a polite term for pyramid selling) but I never made a single sale; in my heart of hearts I knew the stuff I was supposedly selling wasn’t much good and I just wasn’t up to the job of selling it and I certainly wasn’t up to the job of signing up anyone new to the scheme. Anyway all these schemes eventually collapse: they rely on an endless number of people being available to be signed up and the supply of people is, of course, never endless. When the supply of recruits dries up the pyramid collapses.

What to watch out for in particular in the UK is so-called ‘gifting schemes’. The last well-known one was Women Empowering Women (WEW), which began in 2001 on the Isle of Wight. This was a pure cash pyramid – there was no pretence about there being any products of any kind involved. Women were asked to buy one of eight ‘hearts’ on a sheet; above that were four more, then two and finally one – the receiver – at the top. When new ‘gifters’ joined, the original members moved up the pile. When they reached the top they got the £3,000 contributions from the eight new hearts and took home £24,000. There was a lot of talk about helping other women and yourself at the same time and about making money outside the male capitalist society. It was all nonsense – WEW was as much a scam as any other pyramid scheme and like any other pyramid scheme it eventually collapsed. This was a shock to the women who lost money (remember, for every woman who was paid £24,000 eight had to lose their £3,000 stake) but if they had stopped to think about it for just a minute it really shouldn’t have been. Even to move one pyramid down six stages needed a quarter of a million people (8x8x8x8x8x8). To move it down twelve would have required the entire population of the world to be involved. This kind of pyramid still pops up periodically; they call themselves Hearts or Circles. Don’t fall for their stories of sisterly solidarity.

The next money-losing scam to look out for is the lottery or prize draw scam. You’ll get a notification that you have won a huge prize, usually in a US or European lottery. You’re then asked for a registration fee or an admin fee, probably of a few thousand pounds. Don’t pay it – you’ll never hear from them again and you’ll never see your money again. This kind of thing often looks tempting but remember this: if you didn’t buy a ticket you can’t have won the lottery.

Then there are the Nigerian 419 scams. These are called after the section of the Nigerian penal code that legislates against them. They’ve been going for years – first in letter form, then as faxes, now as emails. The idea is simple. They tell you that due to some bizarre quirk of fate they have millions of pounds to hand but they need to get it out of Afghanistan, Nigeria or some other distant country. They want you to help them by letting them use your bank account to receive the cash in the UK. In return they will give you a couple of million to keep. The catch? You have to send them some cash first so that they can pay miscellaneous expenses at the other end. You also need to give them all your personal and account details. If you send the cash you will only hear from them again to demand more and if you send your personal details you leave yourself vulnerable in many ways (never give out your personal details: sounds obvious but people do it all the time). The stories told in 419 emails are always topical and often quite convincing (after the tsunami in 2004, for example, I got an email purporting to be from a newly orphaned teenager who needed help getting his parents’ fortune out of Indonesia – see www.419eater.com for many more fantastic examples). But however good these letters sound you should never respond to them: not only is doing so both greedy and illegal but the authors of the letters are criminals.

Similar fraudsters are involved in the increasingly common eBay/Western Union scam, which works like this. You are selling something online – perhaps a piece of furniture on eBay or a special car on a car sales website such as www.autotrader.co.uk.

You get a response from someone who wants to buy your goods, say for £5,000. They say they will send you a cheque not for £5,000 but for £7,000. The £5,000 is for you but they then ask that you forward the extra £2,000 on to a friend of theirs via money transfer firm Western Union (the story you are spun is that the friend is to arrange shipping or some such for them). You get the cheque. You deposit it and send on the £2,000. Then you get a call from your bank. What’s happened? You guessed it. The cheque has bounced and you are down £2,000. It’s simple but it works brilliantly. One to be aware of whenever you are dealing online.

Finally a word on working-from-home scams. You will often see adverts telling you that you can make money addressing and stuffing envelopes at home. But you can’t. If you reply to the ad you’ll be asked for a registration fee. Then you’ll be advised to make money by placing the same ads you replied to around the place. There is no real job – it’s just a way to con you out of your registration fee. Other similar scams involve adverts that offer work assembling things at home. If you respond you’ll be asked to pay upfront for the assembly kit or whatever materials you might be using. You’ll never get it back and you won’t ever get paid for the assembly – your work will be returned as ‘substandard’. The result? They get to keep your deposit. See www.homeworking.com for more detail on how to avoid falling prey to this kind of con, but most of all remember that you should never have to pay to get work. If you do something’s wrong.

Redundancy

Losing your job is horrible, however much you hated it, however much you kept wishing on a Monday morning that you would lose it and never have to go again. The fact is that being told you are surplus to requirements is a huge blow to your self-esteem. You’ll be shocked, you’ll be angry and you’ll be hurt. But above all you’ll be dealing with the fact that you no longer have an income.

Statutory redundancy pay is pathetic. Between the ages of 18 and 21 you get half a week’s pay for every year of service. From 22 to 41 you get a week’s pay and from 42 on one and a half weeks’ pay. But this is subject to a maximum of a few hundred pounds a week and you can’t claim for more than 20 years of service. This means that the absolute maximum the law can make your firm give you at the moment is less than £6,000.

But there is some good news too. The first £30,000 of redundancy pay comes tax free and you are likely to get more than the very basic amount. This means that redundancy does give you an opportunity to rethink your career and even your life. You could take a few months off to retrain and change direction, for example; now might actually be the time to set up your own business! However, the first thing you will need to do is to get your finances in order to make sure you can weather a few months with no income and to rebuild your confidence. Remember that redundancy usually isn’t personal (if you think it is get a lawyer).

1 Budget. Hopefully you’ll have six months’ worth of money saved up (see Chapter 4) but if not you’ll need to work out how many months you think you could be out of work and budget with your redundancy payment accordingly.

2 Don’t delay in claiming benefits. You should be able to get a job seeker’s allowance, although this will depend on you having paid enough national insurance over the previous two years. If you haven’t paid enough and are in a bad way you may still be able to get a means-tested allowance. You may also be able to get support for rent, council tax and mortgage costs. See www.dwp.gov.uk, the website of the Department for Work and Pensions, for more detail.

3 Don’t rush into the first job you get offered. Being without work is frightening but you spend all day every day at work so you need to be sure you end up with something that is at worst bearable and at best actually enjoyable.

4 Work on your confidence. Make a list of all your skills – not just the ones you have used in your work but all your skills. This will help you to figure out what you have to offer a new employer.

5 Keep going. Set yourself a few targets every day so you don’t just end up staying in bed.

 WHAT Do I Do Now?

 Find out if you are paid correctly.

 Demand more if you are not.

 Take action if you don’t get it.

 Consider changing jobs or even careers to move yourself up the salary ladder.

 Consider alternative, non-salaried routes to bumping up your income.

 Have the right mindset. If you work hard you do deserve to be paid well.

 Make an effort: it isn’t fair but study after study shows that the well-groomed and slim make more money than the poorly groomed and overweight.

 Read the chapter on investing; this explains how to make your money create more income for you without you having to lift a finger.