Planning finances is women's business

The sobering fact is that women are still not paid equally to their male counterparts, women’s super balances are falling way behind men’s and nine out of 10 Australian women don’t have enough super to fund their retirement.

With 40 per cent less super than men, it’s no surprise that women are 2.5 times more likely to live in poverty in retirement than men. And with longer life expectancies than men, women are forced to survive on less for longer than their male counterparts.

Let’s look at seven ways to get you on track for financial freedom.

Start early

The longer you are contributing to an investment egg, the greater the long-term benefit. Small bits over a long time will add up so start as early as possible.

Invest instead of saving

Women are great savers but taking the plunge to invest can sometimes be daunting.

With interest rates at historically low levels, returns on traditional savings accounts are similarly low. Women tend to be more risk-averse than men when it comes to investments. This can be detrimental to long term wealth accumulation.

Start small with a parcel of shares or a managed fund and seek advice if you need. Investing will help accumulate real wealth over time.

Add to your superannuation

Consider salary sacrificing some of your pay into your superannuation fund – this can be worthwhile where your marginal tax rate is more than superannuation contribution tax rate and can reduce your tax bill as the contributions are taxed at a reduced rate.

If you are on a low income and make personal, after-tax contributions to your superannuation then you may also be eligible for the government’s co-contribution which will pay up to $500 directly into your superannuation account.

Consolidate super and review it

Check if you have lost super and consider consolidating super funds to easily keep a track of your super accounts. Be aware of your insurance that is in your fund before you consolidate.

Review your investments in your super fund and ensure they are invested in an area compatible to the level of risk you are willing to take.

Insurance

Women should have important insurances such as life, disability, income protection and trauma insurance. Even if you are not working and raising the kids, don’t underestimate the impact of the additional cost if you were unable to perform your normal daily duties.

Watch your debt

Be smart about how you use your credit cards and loans. Ensure you aren’t incurring interest on your cards and pay off your home loan at a faster rate by increasing your regular payments.

Be smart about everyday spending

Look at your everyday bank accounts and consolidate to save on fees and to better keep track of your money.

Add discipline and set up a spending account with another for fixed/large expenses. Only pay yourself what you want to spend as opposed to what you earn. Save the rest.

Remember, we all have women in our lives that are susceptible to these statistics – a mother, daughter, sister, aunty or friend. Encourage the women in your life to take the time to look at their affairs and plan for a secure financial future.

Olivia Maragna is the co-founder of Aspire Retire Financial Services and has been awarded the Money Management WIFS Financial Planner of the Year. Olivia’s advice is general in nature and readers should seek their own professional advice before making any financial decisions.

Send your finance questions to Olivia at scoop@brisbanetimes.com.au.

You can follow Olivia at https://twitter.com/oliviamaragna

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