Helping women take the stress out of managing money

The saying “A man is not a financial plan!” might be humorous, but it’s also true. 

Many women aren’t aware of how much the household mortgage payments are, what their superannuation balance is or how to invest their money. And it’s often because dealing with finances is something we place in the ‘too hard basket’, driven by the fear of making a mistake.  

Finance experts Julia Newbould and Kate McCallum, co-authors of “The Joy of Money”, share their tips to help women take control of their finances and avoid the most common mistakes when managing money.

Get the basics right

Being smart with money comes down to confidence. Every one of us is different and our circumstances unique, so what’s right for one person might not be right for another. But there are some basic principles you can use to help you become money smart.

Avoid the five biggest money mistakes people make

In our Women Living Well webinar, Julia and Kate discuss the five biggest money mistakes people make.

1. Doing nothing.
2. Assuming that having a good income is enough.
3. Not using tax concessions, especially super.
4. Ignoring cashflow.
5. Not staying engaged with your money.

Most people admit to making at least one of these mistakes, but if you can avoid the first one, doing nothing, then you’ve taken a bold first step towards a better financial future! 

So, let’s assume you’re ready to take action. Where do you start?

Here are a few things to consider when evaluating and taking control of your finances

1. Know how you’re spending your money

In their book “The Joy of Money” Julia and Kate suggest “conscious cashflow” as a great way to manage your cash. It’s more than just budgeting, which often concentrates on stripping back your expenses. With a conscious cashflow, you take account of your income and even explore ways to increase it.

Have you ever considered the idea of spending money to buy time? Maybe not. But before you decide you can no longer afford to have a cleaner once a month, for example, think about how you could spend the time you save not doing household chores and assess whether it could positively impact your earning ability. 

You could also revisit your biggest bills and try to save money, perhaps by negotiating a better price or rate, or switching suppliers.

If you’re aware of where your money is going, it’s far easier to limit waste and ensure your money is working harder on the things you want.

A good way to think about your income/expenditure is with the 50/30/20 rule.

• Spend 50% on daily essentials like food, mortgage costs and other loans.
• Allocate 30% on nice to haves like eating out and travel.
• Save 20% to build future wealth.

2. Make super part of your plan

It can be easy to focus on short-term finances as these are where you’ll see the immediate changes. But it’s important to also think about the future. Superannuation helps you build retirement savings, and as with any investment, forgetting about it or cashing out at the wrong time can be costly. 

Consider making additional contributions to boost your super. If your employer is already making the compulsory SG contributions (10% of your salary in 2021/22) then that’s a great start, but there’s more you can do. 

To learn more, watch the Women Living Well webinar, where BT’s former Managing Director of Superannuation, Melinda Howes, shares her super tips.

3. Give less to the taxman

There are some simple strategies you can consider to help you pay less tax while simultaneously growing your wealth. Why not ask your employer about setting up a salary sacrifice arrangement for your super to help you grow your retirement savings over time by contributing an additional amount from your pre-tax income. 

Although you take home less in your pay packet, depending on your salary level, you may save on tax at the end of the year by lowering your overall taxable income. 

You can also make superannuation contributions from after-tax money (non-concessional contributions). With the Government’s co-contribution scheme, if you’re an eligible low-income earner (earning less than $56,112 in the 2021/22 financial year) and contribute at least $1,000 to your super, the Government may make a co-contribution of up to $500. It’s worth a look!

4. Seek financial equity in your relationship

Financial equity in relationship is important but is not always easy to achieve. That’s because most people enter a relationship with different levels of wealth and financial knowledge. Some have great money habits and bring little debt and good savings, while others bring a suitcase of financial problems.

What’s important is not how it starts, but how you resolve these issues and build a sound financial future together. Communication and transparency are key. Talk about your goals and concerns. Work through them together, remember that conscious cashflow tip from earlier, and don’t forget to make any plan realistic, because if it’s not you’re unlikely to stick to it. 

5. Prepare for a growing family

Having a baby is one of life’s most rewarding moments, but once the ecstasy of the newborn baby bubble has gone, you might start to worry about the financial pressures of maternity leave. 

Just as you prepare for a baby’s arrival by purchasing clothes, a pram, a cot etc, you should also take time to review your finances and consider your new reduced cashflow. A baby might be small, but the impact on your income and your discretionary spend is likely to be quite significant.

Make sure you take time to research all the financial help that’s on offer. Speak to your employer about paid maternity leave so you understand what you’re entitled to, and take advantage of government benefits such as Paid Parental Leave and the Child Care Subsidy.

Know when to ask for help

There’s never a wrong time to get started with building yourself a better financial future. You might have made mistakes in the past but leave those in the past and focus on what you can do from today.

There’s so much information you can source on the internet. Perhaps you’ prefer to sit down with a good book (like “The Joy of Money”) and take it all in over a cup of coffee. Or you could watch our Women Living Well webinar where our experts share their best ideas and tips for taking control of your finances.

You may also wish to consider working with a trusted adviser who can offer tailored advice to set your financial goals and develop strategies to reach them. It could be a financial planner, an accountant or your personal banker. Only you will know who you feel comfortable with. 

Be confident. Look to the future. Get started today.