While the gender divide might exist when it comes to superannuation balances and salaries, one thing tipped in favour of Australian women is in fact home ownership.
In general we are seeing more women owning their own property today compared to previous generations, and the statistics prove it.
According to census data from the Australian Bureau of Statistics, 61 per cent of Australian women own their own home, compared with 58 per cent of men.
Single women in particular are flexing their financial muscles, with 65 per cent of single Australian women owning their own homes compared to 55 per cent of bachelors.
Women, however, do tend to be more conservative than men when it comes to investing and generally opt for owning their own home rather than property investing and negative gearing, which can be a more aggressive, riskier investment strategy.
Nonetheless, by following these simple strategies there’s an opportunity for financially savvy women to make hay while the sun shines and take thousands of dollars - and years - off their mortgage while interest rates are at an all-time low.
1. Review your home loan structure. Whether it’s a low or high interest rate environment, it’s important to reassess your home loan to ensure it’s structured appropriately. This may be a good time to split your home loan into fixed and variable and pay off the variable portion faster while interest rates remain low.
2. Maintain the same level of repayments. Even though your minimum monthly repayments might be less now thanks to lower interest rates, by keeping up the same repayments and paying off your home faster you’ll free up money to invest in other areas towards your retirement – especially important for women who currently retire with far less super than men.
3. Pay off bad debt. It’s the best time to reduce any non-tax deductible debts which includes credit card balances, car loans or any of those other personal loans you took out to purchase furniture or electrical goods for your home. Even though official rates are at a record low, these loans continue to attract maximum interest as high as 25 per cent. Once you’ve got these debts under control, lower your credit card limit, or better still get rid of the ones with the highest interest, and repay any future loans within the interest-free period.
4. Consolidate bad debts. Say you owe $20,000 on your credit card, which has an interest rate of 25 per cent a year. If you are making the minimum repayment of $500 each month, by the time you have paid off your credit card in full, you will have spent more than $23,000 in interest. If instead you choose to consolidate that debt into your 30-year home loan with an interest rate of, let’s say 4 per cent a year, and continue to make the $500 monthly repayments, the extra debt would be paid off in three years and eight months and you would pay $1501.71 in interest – saving yourself $21,500
5. Start up a managed fund. Don’t fritter away your surplus income thanks to lower interest rates – set up a managed fund investment plan as a way of diversifying your wealth outside of your property into another asset class. Drip feed savings into the fund each month by setting up a regular contribution. This is an easy and accessible strategy to establish that provides a way of building wealth outside of your home to give you more financial freedom in the long term.
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/
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