Wouldn’t it be great to wake up one morning with all your financial worries gone? No more credit card debt, money in the bank, good investments and knowing your super is on track to see you through retirement.
Sound too good to be true? Well for a large majority of Australian women it is.
We’ve heard a lot of discussion around International Women’s Day that, despite improvements in the gender divide, many women are increasingly required to juggle work and family responsibilities – and getting paid less than men to do this.
It’s astounding to be still reading statistics which show there is a big gap between men and women when it comes to income. The Federal Government’s Workplace Gender Equality Agency reported that the full time average weekly earnings for a woman in 2015 was $1307.40 compared to a man who earned $1591.60 – a difference of $284.20 a week.**
Despite these challenges, let’s look at ways women can shrug off the doom and gloom and take matters into their own hands to achieve financial independence and become a ‘super’ woman.
1. Seek advice early
Let’s face it, most financial planners would see only a handful of single professional women aged under 35 proactively looking for advice about managing their money and creating wealth to reach their goals. Most women instead wait until they are older to start getting strategic with their finances, by which time the path to financial security has often become more difficult. A financial adviser can help you to determine your goals in life and work out a plan to achieve those goals. Choose an adviser who you are comfortable with and check their credentials.
2. Get savvy about saving
Treat savings as a regular expense and put aside 10 per cent of your earnings each month into a tax effective investment option, such as a managed fund. Use equity in your home to invest in another property. Starting a savings regime younger and not frittering income away will greatly improve your wealth position throughout life
3. Wise up about super
Get your super statements out and look at how much you have in your super account and, importantly, how it’s invested. If retirement is 20 or more years away, you’re likely in a position where you can afford to tick the box for a more growth-oriented investment strategy. You can contact your super fund to find out about your asset allocation or speak to a qualified financial adviser.
4. Pump it up and salary sacrifice
Even if retirement seems light years away, it’s a great step forward to get in early and boost your super balance through salary sacrifice. Even if you can afford to salary sacrifice just $5,000 a year into super, this is likely to grow faster than most other savings because of the tax concession in super and the effect of compound interest. If you’re self-employed, you can set up your own salary sacrifice and pay more into your super and claim a tax deduction.
5. Take advantage of super co-contribution
If you earn less than $50,454 in 2015/16 and you make a personal contribution to super, the Federal Government also will kick in up to $500 into your super fund. Also, if you have a partner, look at spouse super contributions. If your partner’s income is higher than yours, they could help build your super by contributing on your behalf – and your partner can potentially receive an 18 per cent tax offset (up to $540), or vice versa if you are the higher income earner.
6. Get serious about your debts
If you have a mortgage, to succeed in getting it under control, and then making inroads, you will have to make sacrifices. Rolling all your non-deductible debt into your home loan, if you have one, can be a great debt management strategy as this usually ensures that all your debt is at a lower interest rate. If possible, you should also try to increase your home loan repayments to pay off the mortgage quicker.
The gender pay gap may still exist, but that doesn’t mean women can’t be financially secure and have to panic about living on the breadline in retirement after all the years they’ve worked.
Jenny Cattach is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706. Any advice given is general only 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.Website: cattach.com.au/