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 $49,488 in 2014-15 ($50,454 in 2015-16).
Diana points out that you may be eligible for the co-contribution two years running, if your maternity leave extends into a second financial year.
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 your partner leaves or passes away?
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", 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.
Thinking seriously about how to better fund your retirement with super or investments? Find out more at bt.com.au.
This information is current as at 18/05/2015.
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.
Information current as at 29th April, 2015. 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 long-term investment. The government has placed restrictions on when you can access your preserved benefits.
The Government has set caps on the amount of money you can add to superannuation each year on a concessionally taxed basis. In addition, the government has set a non-concessional contributions cap. For more detail, speak with a financial adviser or visit the ATO website.