Australian women still face significant financial gaps compared to men. According to the Workplace Gender Equality Agency, there is a 15.3% wage gap and this extends beyond the working years into superannuation and lifetime security1. Money is frequently tied to relationships and, where emotions are involved, challenges increase.
The Stella Network asked three experts the top three things women could do to enhance their financial security and that of their loved ones in a relationship: Daniella Elchaar, Senior Adviser for BT Advice; Peter Bobbin, Principal for Argyle Lawyers and Charlene O’Doherty, Advanced Financial Planner for BT Advice.
1. Taking charge of your own finances
It starts with the simple things. Being clear on your assets, income and debt. Sharing ownership of household bills or debts by having these listed in both yours and your partner’s names. Taking out insurance for yourself in your own name and updating this as your situation or relationship changes.
By example, Charlene cites a client going through a divorce who had an insurance policy covering her life, but as it was in her husband’s name, she wasn’t actually able to access it. To change it over, she needed it transferred from her ex-husband who was unwilling to relinquish it
2. Know your partner and their finances
Your partner’s finances and their approach to money can have a significant impact on you.
Daniella says, “You need to bear in mind their past. And ask yourself, are you happy to be honest in front of each other.” If you can’t discuss finances honestly, this sort of information can often come out in a more damaging way – at the point of trying to apply for a loan like a mortgage together. It also helps to be aware of any family circumstances that could affect you too. For example, Daniela jointly owns property with her sister, meaning she and her husband need to consider her sister, and the shared asset, in their financial plans too.
If you feel uncertain about your partner’s financial behaviour, you can do a number of searches to verify their financial background with many easy and publicly available options. As Peter says, “Meet him on Friday, do a bankruptcy search on Monday.” According to Peter, you can also search details on whether they own property, a company or (with their permission) their credit history.
3. Plan your estate
It’s important to keep your Will and beneficiaries to your superannuation up to date. It’s not uncommon for people to forget to do so and it can have large consequences. For example, Peter mentions a client who inherited all of her ex-husband’s assets when he died because he hadn’t updated his Will. It’s also about thinking through all the possible scenarios. One of Daniella’s clients passed away and her second husband inherited her assets. Unfortunately, he then passed away and all the assets passed on to his children, leaving her children with nothing and no recourse.
When it comes to effective estate planning, the first step isn’t heading straight to your adviser or lawyer, it actually starts with you.
“The three most effective tools are a blank sheet of paper, a pen and a glass of wine. Ask yourself ‘I’m dead, my partner is alive, the kids are alive, what do I want to see happen?’ and write it down,” says Peter.
Peter then recommends you keep changing the scenario. Think about worst-case scenarios, or soften the situation so it’s about what happens in an illness or disability. Then you are equipped with all the information an expert might need to help you.
Taking the steps to be independent
At the end of the day, the three experts agree the most important part of being financially secure is about being independent – in terms of being responsible for knowing and managing your finances and being aware of those around you and how their situation can affect you too. Taking responsibility for yourself both in and outside of a relationship is part of the key to protecting yourself and your loved ones if the worst happens.
1. Workplace Gender Equality Agency, Australia’s gender pay gap statistics, February 2018.
Information correct as at 8 March 2018. This information does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to your personal objectives, financial situation and needs having regard to these factors before acting on it.