4 financial problems that only women face

We’ve always been passionate about encouraging women to take an interest in their money, rather than taking it for granted or surrendering the responsibility to a partner.

Having seen friends struggle to make ends meet when the unexpected happens, we know first-hand how important it is to have an independent understanding of finances. This is especially true given the fact that women face a unique set of challenges compared to their male counterparts.

To get the ball rolling, here are four financial issues which women have to deal with… and how to handle them.

1. Less time in the workforce

Despite the introduction of the term ‘house husband’, when it comes to raising a family, women are most likely to stop work to take on the role of primary carer. It has a ripple affect through everything from the amount of superannuation at retirement and reduced opportunities for advancement.

This makes it incredibly important to sit down and build a financial plan as far in advance as possible if you’re thinking of starting a family.

Can you afford to live on one income plus cover all the additional costs babies bring? Are you insured in case something happens and your partner can’t work? Does your work have a maternity leave policy and have you satisfied the conditions to benefit from it?

The last thing you want to do when the baby arrives is worry about how to pay the bills.

And what about getting your partner sharing a greater load of the caring so the woman can maximise her career opportunities.

2. Income inequality

According to the government’s Workplace Gender Equality Agency, the national gender pay gap is 17.1 per cent, with the average male taking home $1,532 a week compared to $1270 for females.

One common explanation is that women are notoriously less likely to ask their boss for a pay rise, whereas men are more comfortable having conversations about money.

So don’t get left behind. Make sure you understand the benchmark salary for similar roles and have regular performance conversations with your manager.

Check with recruitment consultants and online job search sites to asses your real market worth.

When discussing pay, be prepared and list the tangible reasons you deserve a pay increase, focusing on what you can bring to the business and what you’ve already achieved.

3. Divorce hits harder

The median age for divorce for women in Australia is 38.5 years old.

At this age many women have been in and out of the workforce raising a family and could have lower earning potential as a result. In many cases, women will also take on primary responsibility for looking after the kids after a split.

To combat this, take the time to get on top of your family finances. Have regular and open conversations with your partner about money, and make sure to have a full understanding of the family’s financial position.

Not only will this help you manage money better, it will also be a huge help in the event the relationship ends.

4. Living longer

On average, women live for approximately five years longer than men.

But on top of everything we’ve already mentioned, the average super pay out for women at retirement is 43 per cent lower than that of a man.

These two factors mean it’s crucial for women to take steps as early as possible to address the retirement savings gap.

Contributing extra to super through salary sacrificing, combining multiple super accounts and investing in appropriate assets will ensure you’re maximising your balance at retirement.

5 easy ways to change your money mindset forever

Humans are creatures of habit, and unfortunately when it comes to money many of us have picked up a few bad traits over the years.

However, we all have the power to change, and if you make an effort to ingrain positive financial habits into your life chances are they will end up sticking.

Here are five easy ways to change your money mindset forever.

1. Save 10 per cent of your income… without fail

Every time you get paid, send at least 10 per cent of your income to a high interest savings account that you simply don’t touch. If you receive a salary, set up an automatic debit from your transaction account to a separate investment account to make sure this always happens. This may not be enough to achieve all your financial goals, but it’s a great start.

2. Become a year-round negotiator

From bank fees to televisions, gym memberships to insurance, you’d be amazed at how many things are negotiable. You’ll be even more amazed how much you can save when you commit to negotiating on every transaction you make.

To do this, you need to be informed about the product or service you’re buying, leave any emotions at the door and always be prepared to walk away. Yes, it takes up a bit of time and confidence, but the savings will be more than worth it.

3. 15 Minute Monthly “Money Love”

We understand that learning about money isn’t everyone’s cup of tea, but you’re doing yourself no favours by staying in the dark about finances. Take the time to think about your financial goals and how you will achieve them, then build a basic budget and make sure you’re living within your means.

If you have amassed big credit card and other bad debts, put a strategy in place to pay them off as quickly as possible. My Money Makeover can help you do this.

Every month set aside just 15 minutes to THINK about your money and give it some love. Not to pay bills or do financial admin, but to set goals, assess how you’re doing financially, or adjust behaviour. In other words, working on your finances rather than in them.

Kochie’s advice on how to ask for a pay rise

4. Take super and insurance seriously

When it comes to money, superannuation and insurance are often put in the too hard basket. They seem complicated and you don’t benefit in your regular day to day life today. However, superannuation and insurance are vital to your long-term financial well-being.

For many people, their superannuation account is their single biggest asset. It will determine your lifestyle for 20 or 30 years of retirement. How much thought have you given to how it’s invested and the fees you’re paying. The Money Makeover will show you how to get informed and take an interest in your superannuation to maximise your nest egg.

Meanwhile, insurance could be the only thing standing between you and financial ruin. Make sure you understand your policies and read the fine print. Are you adequately covered?

5. Set-aside an ‘opportunity’ fund

An emergency fund is money you set aside and don’t touch unless you really, really need to, and we think this is a great idea. But instead of thinking about this as money for an emergency, we prefer to think about it in terms of the opportunity it affords you.

We recently heard a story about an American named Matt Becker who lost his job, but used the financial flexibility that his “opportunity” fund gave him to take a chance and start his dream business… a financial advice firm for new parents.

It’s a good story, and goes to show that improving your money mindset isn’t just about having a bulging bank balance.

It’s also about giving yourself the opportunity and flexibility to make good decisions in your life.

6 things you can do now to maximise your super

With life expectancy climbing and the government tightening its belt on Age Pension concessions, it’s never been more important to make sure your super is in good shape. And we’re not just talking to those approaching retirement.

Younger people should keep in mind that the current (relatively generous) Age Pension and associated concessions will likely look very different by the time they reach retirement age.

This means that having a healthy stash of super will be even more critical to enjoying a comfortable retirement. And younger people are in the box seat because they have time on their side… a little extra contribution today will make a massive difference to a retirement payout.

We know that super isn’t the sexiest subject, but the shifting landscape means that it’s one you need to be across. Here are six things to do now to put your super on the right path.

1. Consolidate your accounts

Around 15 million Australians have a superannuation account, 43 per cent of those Aussies have more than one account and 18 per cent have more than 3 superannuation accounts. On top of that, there are 5.7 million accounts which have “lost” track of their owners worth $14 billion.

Multiple accounts means multiple sets of fees eating away at your savings, so it’s crazy not to pool them together. Sign up for a myGov account and link it to the ATO to see a list of accounts in your name and get the consolidation process started.

2. Understand the fees you pay

Once your super’s all in one place, it’s important to understand exactly what the fund is charging to manage it so dust off that latest statement and read it through.

New legislation has forced super funds to be clearer about the fees they charge, which makes it easier to compare the market and work out if you’re getting a good deal. At the end of the day, being informed will help you make better decisions about who manages your money.

3. Choose your investment option

One of the most important decisions to make about super is where to invest the money.

Most super funds offer a choice of investment options ranging in complexity from balanced funds to highly leveraged growth funds and even direct shares. Each option comes with a varying degree of risk compared to the expected reward, and where you decide to invest will have a lot to do with how comfortable you are with risk and your stage of life.

All funds have a default option which is usually very conservative. Ultimately, it’s a personal decision, but as an example people close to retirement often take on less risky investments to protect their nest egg against a drop in the market. Young guns in their twenties can afford to take a few more chances because they have time on their side to ride out a downturn.

4. Review your insurance

Super funds often automatically provide new members with some combination of death, permanent disablement and income protection insurance. This cover’s usually fairly basic in nature though and often isn’t enough to cover people’s actual needs.

It’s important to account for your personal situation when taking out insurance, so review cover carefully and if necessary enlist the help of a financial adviser.

5. Nominate a beneficiary 

If you pass away unexpectedly and haven’t nominated a beneficiary, the distribution of the money in your super account (as well as any insurance payout you’re entitled to) will be handled by the fund’s trustee.

They’ll go through a formal process and make a judgement about who has claim to your super estate, but their decision may not correspond with your wishes. So take the time to lodge a beneficiary nomination form with your fund to get some peace of mind.

6. Maximise contributions

Salary sacrificing allows you to benefit from tax concessions by kicking in a portion of your pre-tax salary (on top of your compulsory contribution) into superannuation up to an annual limit which is determined by your age.

It’s also possible to make after-tax contributions to take advantage of the concessional tax on any investment earnings.

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