There's a lot to love about being a woman. But when it comes to managing your finances females are at a disadvantage.
Statistics show women earn approximately $239.80 less than men per week. They also take more career breaks to care for their families and retire earlier with a lot less money than men do.
So how can women empower themselves and take charge of their financial well-being? Let's break it down.
Entering the workforce
As you enter the workforce it’s important that you set a disciplined budget and savings strategy that allows you to save 10% of your salary each month. This will in turn allow you to have an emergency fund that can sustain three to six months' worth of expenses should the need arise.
Once you establish a budget and savings strategy, consider setting a longer-term financial plan, under the guidance of a financial adviser.
The aim of a financial plan is to build a financial strategy to help you achieve your long-term financial goals over 5, 10, or 20 years. It looks at milestones such as buying a car, buying a home, and taking your savings and putting them into short and long-term investments.
Remember, a financial plan should be reviewed quarterly or semi-annually to stay on top of any changes in the market.
Mid-Career
At this stage, you’ve hit the 30-44 age bracket and may be married or have become a mother. With increased commitments comes increased financial responsibilities, and potentially reduced income. You are likely to have purchased a home, and committed to a short and long-term investment strategy, all with the aim of building passive income streams to fund your golden years.
However, there are several questions you should ask yourself as you hit this critical point in your life and which can ultimately have a big impact on your financial future:
Once you’ve answered the basic questions, you need to do a deeper dive into your finances and ask yourself:
- Should I take on more debt? Depending on the state of the market it may be wise to look at investing more of your money on a big ticket item like an investment property.
- Am I maximising my superannuation contributions? By topping up your super contributions you can bolster your balance for retirement.
- Do I have an investment strategy and is it working for me? If you already have an investment strategy, it’s imperative to review it annually. If you are yet to invest, speak to a financial adviser about a short and/or long-term investment strategy that is right for you.
Preparing for retirement
At this stage you’re in your late 40’s to mid-50’s and in your peak earning years.
Statistics reveal that you should be earning your highest income between the ages 45 and 54, so now is the time to get serious about saving every penny. Veering away from the "treat yourself" mindset and focusing on purchasing the essentials will help you work towards a comfortable retirement.
You should also update your knowledge when it comes to concessions to boost your superannuation fund. There are concessional super contributions, spouse contributions and government assistance that can help you increase your super balance.
It’s also important to make sure you consolidate your super into the account that most suits your needs. According to the Australian Taxation Office (ATO) around four million Australians hold two or more super accounts, all being charged more than one set of fees. You can search for lost superannuation accounts here.
One of the last items on your to-do list and an item many neglect is the need to set up an estate plan. Regardless of your marital status, it’s important you get this in order so your last wishes can be carried out correctly.
Here at Fiducian Financial Services, we’ve compiled a series of videos to help you with your finances for every stage of your life.