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.

Not fair: why women need to pay more attention to super than men

While we have taken many positive steps towards gender equality in Australia, it’s a sad truth women retire with fifty per cent less super and will live five years longer than men. How on earth does this happen?

First, there’s the gender pay gap. The average women in Australia earns 17% less than her male counterparts, and as a result receives less compulsory employer super contributions.

Second is family. Many women still take on the role of primary carer when they have kids, meaning extended time out of the workforce. Many only return to work part-time (if at all).

In the face of these challenges, we can’t stress enough how important it is to take control of your super now. Here are five simple strategies to boost your retirement savings, regardless of income.

1. Consolidate

Having multiple superannuation accounts means you’re paying multiple sets of fees. The result? Less money in retirement.

You are in total control of where your super lives, so it’s up to you to reduce these costs and consolidate your super into one account.

Register with MyGov (my.gov.au) and link your account to the ATO to get an overview of all the super accounts held in your name, including some any you may have forgotten about.

You can kick off the consolidation process from there. Alternatively, contact your main fund and ask for help moving your money across, they’ll be more than happy to assist.

2. Government contributions

If you earn less than $50,454 each year and pass the eligibility test, you can take advantage of the government’s super co-contribution.

That means, if you make an after-tax contribution to super, the government will make a co-contribution into your fund, up to a maximum of $500.

People earning less than $37,000 may also be eligible for the low-income super contribution, or LISC. This is currently equal to 15 per cent of the concessional super contributions your employer makes into your fund over a year.

And for low income earners, your spouse may also make contributions to your super account (and in certain circumstances receive a tax-offset). Visit the ATO website (ATO.gov.au) for more details and to see if you’re eligible.

3. Salary sacrifice

Salary sacrificing allows you to take some of your pre-tax earnings and funnel them directly into your super fund.

These contributions are taxed at a concessional rate, and not subject to the marginal tax rate your take-home pay would be.

Plus, any investment earnings you make inside super will be taxed favourably too, and you’ll also pay less income tax. Salary sacrificing can be an effective way to really boost your retirement savings, particularly for people approaching retirement.

4. Seek advice

Super is a complex area littered with confusing jargon, which means working out the best course of action to maximise your balance at retirement can be difficult. But don’t let confusion turn into apathy.

If you’re struggling to make sense of super, a good financial adviser will have the skills and knowledge required to boost your balance and educate you on how it works. We really believe that sometimes the best investment is good advice.

5. Focus on career

Finally, this isn’t directly related to your super fund, but it’s still important.

Research shows women are less likely to negotiate when it comes to their pay packet compared to men… or they don’t negotiate as hard.

Over the course of a career, this can really hurt your pay packet… and your super balance. So if you are working, make sure you understand your worth and don’t be afraid to negotiate fairly when the time comes.

Taking control of your super by following these five steps is another simple but positive step towards gender equality in this country.