ECONOMY

How to protect your financial future

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Jennifer Dalitz, the chief executive of Women in Banking and Finance agrees: “Learn how to be financially independent, then guard that freedom. Own assets in your own name, you never know what the future will bring. And keep a savings account that only you have access to in case of emergencies.”

2. Learn to invest as a single person

Australians are coupling up later in life, but the wonders of compounding interest work best the sooner you start, says independent economist Nicki Hutley. “One of the best lessons to learn early is the value of compound interest. Too many women don’t have enough savings or super. Socking it away as much as possible when you are young is critical.”

Shani Jayamanne, a senior investment specialist at Morningstar, says a study in 2017 by Fidelity found that while women are often less confident to invest, they were better savers than men and more successful investors when they put their minds to it.

“Women saved an annual average of 9 per cent of their pay check compared to an average of 8.6 per cent for men. Not only did they save more, but women also made better investors,” says Jayamanne.

“Women outperformed men by 40 basis points, or 0.4 per cent. This seemingly small difference in savings rates and investment returns can make a big difference over the long term.”

3. Make sure you are not underpaid

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Baird says it’s important women ask around to make sure they are not being underpaid at work or in their super.

“Check your pay rate,” Baird says, “and seek comparisons with like work colleagues to ensure you are not advised being underpaid or undervalued. Check your superannuation balance and fund on a weekly or monthly basis.”

Unions can also be an important back-up, says Baird. “Join your union – this will give protection and strength if you have to challenge a pay or employment issue.”

4. Create a budget and know your assets

Knowing exactly how much you are paid and how much it costs you to live is crucial to good financial decision-making. Knowledge of your assets is important, too, both to protect them heading into a new relationship and during a relationship breakdown.

“When people are separating, it’s a very emotional time and they must also make big decisions about assets worth a great deal of money,” says Gabrielle Canny, the project chief of amica.gov.aua new government website designed to help separating couples avoid costly divorces.

“In the first instance, people need to agree on issues such as the precise assets they have, the debts they owe, the income of each person and their relevant expenses including those relating to dependent children.”

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Both men and women can better protect themselves by having this knowledge, says Canny.

    5. Invest in yourself

    “No one is coming to save you,” says Dalitz, who urges all women to remember they are their own greatest potential income generating asset.

“Educate yourself to increase your prospects of a well-paid job. Manage your life and career around your goals and dreams. And put yourself first: remember to recharge the battery regularly, if you don’t want to burn out.”

”All of this in concert will give you a solid and sustainable financial footing, and that will empower you when it comes time to negotiate salary, apply for promotions, and leave personal and professional relationships that no longer serve you.“

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