11 financial issues that affect women

What you can do to achieve financial security?

1. What do I want to achieve?

• Visualise a financial roadmap for one year, 5 years and 10 years time.
• Choose your destination – set realistic short and long term goals.
• As the old saying goes ‘Knowledge is Power’. Educate yourself – learning more about finances will give you greater control over your money. It is essential that women are armed with the knowledge and skills required to make important financial decisions, and plan for a secure financial future.
• Make your finances a priority!

2. Monitor your spending – Do you need that impulsive purchase?

• Knowing what your spending habits are can greatly help you make positive changes and avoid unnecessary expenses. Set and stick to a budget. Be flexible and adapt your budget to fit in with your ever changing circumstances. A great idea is to keep a spending diary for a month – separate items into essentials, nice but not necessary and wasteful spending; you’ll be amazed what you find! Invest any surplus or pay insurance premiums.

3. Consolidate Debt

• Paying off one large debt may result in less fees and lower interest charges.
• Paying a little extra than the minimum repayment each month can have a huge impact on the term of your loan.
• Aim to fully pay off your credit cards monthly.

4. Set up a cash buffer

• A cash buffer invested in a high interest savings account will provide funds for unexpected expenses.

5. Plan for known expenses

• Plan for known expenses by setting up a regular savings plan and direct funds to your high interest savings account.

6. Pay yourself first

• As a rule of thumb, try to save a minimum 10% of your annual income.
• Start a savings plan and discover the beauty of compound interest.
• Start investing – even $20.00 per week into a managed fund will make the world of difference over the long term.

7. Be prepared for your retirement

• Women live longer than men but generally earn less and take time out of the workforce to care for children so it is important to start preparing for your retirement as early as possible. Don’t just rely on the 9% superannuation contributions, try to salary sacrifice a small amount into your super. By doing this you will lower your taxable income and increase your super balance. Even $20.00 per week can make a huge difference to your future retirement income.
• Take advantage of co-contributions – if you work casual or part time make the most of your situation by making voluntary contributions to superannuation and enjoy the benefits of the Government Co Contribution scheme which matches your contributions up to a $1.00 for each dollar you put in.

8. Consider your investment strategies

• If time is on your side then you may consider investing in a higher risk investment style. Investments fluctuate over time, so the longer you have the more risk you can afford to take.

9. Are you Invincible?

• Set up insurance to protect yourself and your loved ones in the event you pass away or become sick or injured and are unable to work.
• Have insurance in place to cover debts and funeral expenses, to provide for your children’s education and to pay for quality child care.
• Life insurance, Total & Permanent Disability and Income Protection insurance can be set up within your superannuation fund taking the pressure off your cash flows. Having your Superannuation own your life insurance policy is also the most tax effective way of owning this type of insurance.
• Review your insurances regularly and update as your circumstances change.

10. Divorce and Sexually Transmitted Debt

Unfortunately 1 in 3 marriages end in divorce and 1 in 5 women never marry. When a marriage ends it can be an ugly battle to see who gets what and women may end up with what is known as Sexually Transmitted Debt. This may mean being responsible for someone else’s debt especially if you’ve gone guarantor on someone else’s loans.

• Have a financial agreement in place to make sure you are both clear on who gets what.
• Read the fine print – make sure you understand everything you are signing.

11. Is your Estate Planning up to date?

• Prepare a Will so the distribution of your assets is not left to a court.
• Prepare appropriate documentation so your children’s future is not left up to a stranger.
• Discuss with a legal professional whether or not you need a Power of Attorney.
• Whatever happens in life, it’s important to be confident in making financial decisions. Discussing your goals with a financial planner is the first step in making sure you understand your financial situation.