5 ways women can take charge of their financial future
Generally speaking, women in Australia are financially worse off than their male counterparts. New data from the Australian Bureau of Statistics has found that Australia women retire with 37 per cent less super than men, with data showing that women between 55 and 64 years of age have an average of $196,000 in the bank, compared with $310,000 on average for men.
Further data collected by the Workplace Gender Equality Agency shows that while women have come a long way to closing the gender pay gap, Australian women are still earning 16 per cent less than men.
Another indicator of the financial situation of many women working within Australia is the Sydney Women’s Fund report released in November 2018 that found 49 per cent of women in Sydney were financially struggling or ‘just getting along’. The report also found that 49 per cent of women paid more than 30 per cent of their total income for housing, and just 11 per cent were confident they could finance their retirement.
the Australian Securities and Investments Commission even has a handy infographic that details how a first child can cost around $13,000 in the first year, and how having children can impact a woman’s ability to grow their super balance. The infographic also outlines that half of Australian women work part time, while only one in six men work part time jobs.
All these things different elements of financial life can stack up against women and put them at a disadvantage financially. We asked the finance experts at AMP for their best advice for women looking to build a successful financial future for themselves.
1. Money Management
Getting on top of your finances can be a daunting task, especially if finance isn’t your thing. The key to money management is to keep it as simple as possible, that way it will seem like less of a task. Technology can take all the hard work out of budgeting for you. There are a number of smart bank accounts and apps out there that can help you to take control of your finances, leaving you with one less thing to worry about.
“Look at a bank account that does more than just tracking expenses,” says AMP Adviser Dianne Charman. “A smart account that manages your money for you can help when you’re trying to minimise spending”.
2. Saving on account fees
Whether you’re saving for your kids’ education, buying your first home or a bucket-list trip to the Maldives, it can sometimes seem that you’re never getting ahead with your savings. There are various saving accounts on the market, so it is important to know which features are most important to look out for.
The interest rate on an account is one of the most important features as it will directly impact how much extra cash we get paid back. You work hard for your money so it’s only right you have an account that works hard for you. Work with your financial adviser to decide what type of calculation and interest payment will work best for you which can include:
- Calculated daily
- Paid monthly
- Paid quarterly
“Keep an eye on account fees you might be getting charged on your savings account,” says Charman. “Some banks and financial organisations charge a monthly account fee, which in some cases can equal the amount of interest earned.” Account fees might seem minimal but they can add up in the long run and make a big difference, make sure you understand what your account fees are.
3. Invest like a boss
Here’s one for us ladies, research shows that women make better investors than men because they spend more time researching investments and are better at matching their goals to their investments. So, how should we be investing?
“Your investment goals, time frame, and the level of risk you’re willing to take will all influence where and how you choose to invest your money,” says Charman. “Whatever your goal, remember there are risks attached to investing as returns aren’t always guaranteed.”
Follow these steps when you’re looking to get started on investing, either on your own or with the help of a financial adviser:
- Work out your current position, and how much you can afford to invest
- Establish your goals and put a timeline on them
- Consider implications for the short/medium/long-term
- Decide if you want to invest yourself or with help
- Ensure you understand what you are investing in
- Track performance and adjust.
4. Superannuation self-care
Self-care is on-trend right now but go beyond face masks and yoga, getting on top of your super today is future self-care. There are lots of great tools out there to help, such as AMP’s retirement simulator which can help you work out what your annual retirement income might be and how long your money may last.
“Knowledge is power, so it’s essential to understand what your super situation is and how you can take control of it,” says Charman. “Recent changes allow most Australians who are eligible to contribute to super, to now claim a tax deduction for their personal super contributions made using after-tax money.”
Women are particularly affected by super with our working lives often interrupted by looking after family members, childcare or working part-time jobs. Other legislative changes are now giving you the chance to “catch-up” with catch-up concessional contributions. From July 2018, eligible workers can start to accumulate unused concessional contributions and carry them forward from July 2019. “This is a great way for women in different years to catch up on super contributions and if they have a capital gain from the sale of other assets, this can help reduce the capital gains tax by diverting to super,” says Charman.
Staying on top of your super and the laws that apply, can give you greater transparency and management over your retirement - regardless of how far off it may seem right now.
5. Save the environment and save money
Thinking green can also result in saving more green! For example, instead of replacing household goods consider whether existing items can be repaired, reused or upcycled for another purpose.
Or, if you find you’re throwing out food at the end of every week, you might be able to reduce your grocery spending. Take a look at what usually ends up in the trash and cut it out of your weekly shop.
If you’re part of a two-car household, honestly consider whether you can do without the second car. While this may mean increased spending on public transport and taxis, this very well could be outweighed by the environmental benefits plus the savings made on petrol, tolls, parking, registration, insurance and maintenance.
“Not only will being environmentally conscious feel rewarding but so will the savings to your purse,” says Charman.
All the advice in this story is general in nature and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.
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