We take a look at four life events which women, in particular, need to pay attention to when thinking about their finances.
Wealth creation is a lifelong journey, but the path can take some dramatic twists and turns. This is especially true for women as they navigate the gender pay gap, the super gap, and the gaping hole in their earnings when they take time out to care for children or elderly parents.
We’ve put together some financial tips to help women get ahead, come what may.
Landing your first job
This is your first real opportunity to save so grab it with both hands while you have the capacity. Start by redirecting some of your income into a separate high interest savings account while you map out your plans for the future.
"If you don’t think about what you want, and aim beyond the moment, you can be limited by your current situation", says Westpac Senior Financial Planner, Diana Saad.
You might start saving for an overseas trip, your wedding, a first home or an investment property. The amount you put aside is not as important as establishing good financial habits that can repay you with interest.
Preparing for maternity leave
If you are planning to take maternity leave, consider arranging for your partner to make a spouse contribution to your super fund.
You may also be eligible for the government co-contribution, especially if you begin maternity leave part way through the financial year and your annual salary falls below $51,021 for 2016-17. Annual salary would need to be below $51,813 in 2017-18 to be eligible for government co-contribution.
You may be eligible for the co-contribution two years running, if your maternity leave extends into a second financial year, says Diana.
Dealing with divorce
Diana says she sees a lot of smart, sophisticated women who still leave the responsibility for joint finances to their partner. But what if you and your partner separate?
No-one enters marriage expecting divorce. But in the spirit of 'expect the best but plan for the worst', make a point of knowing how your joint finances work. This includes bank accounts, investments and superannuation.
And make sure you own your own life insurance policies. Cross-ownership of life insurance is common between spouses (except for income protection which must be held in your own name). But there can be unintended consequences if your marriage breaks down and you need to make a claim.
"Say you have trauma cover in your ex-partner’s name and you are diagnosed with cancer. He can receive the payout, even if you are divorced", says Diana.
Women live longer than men on average, which means they need more savings to fund their retirement. Unfortunately, women are still retiring with much smaller nest eggs than their partners.
With this in mind, the sooner you start re-directing income into super or other investments, the longer you can have for compound interest to work its magic. "It’s never too early to start saving for retirement, even if you just put away small amounts. You could salary sacrifice into super or build a share portfolio. The choice is yours, as long as you are saving money that can increase in value and generate income in retirement", says Diana.
Review your situation regularly
Your financial needs and priorities may change over time as your circumstances change – such as, getting married, having a child, going through a divorce, or if your partner passes away. You should consider protecting your wealth to account for any changes like these by updating your will, super beneficiaries, insurance or any other financial commitments you may have.
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This information is current as at 7 April 2017.
This information does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. The information provided is factual only and does not constitute financial product advice. Before acting on it, you should seek independent financial and tax advice about its appropriateness to your objectives, financial situation and needs.
This information provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
These projections are predictive. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections. Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investment held in superannuation.
The Government has set caps on the amount of money you can add to superannuation each year on both a concessional and non-concessional tax basis. There will be tax consequences if you breach these caps. For more detail, speak with a financial adviser or visit the ATO website.
BT Advisers are representatives of Westpac Banking Corporation ABN 33 007 457 141 AFSL & Australian credit licence 233714 (Westpac). BT Advice is a Division of Westpac.