Women face unique challenges when it comes to finance; factors such as the gender pay gap and increased likelihood of a career break to care for children or elderly parents have a dramatic impact on financial situation and superannuation. Couple this with both the rising rate of divorce and the fact that women are living longer than men, and it’s not surprising that many women are facing the prospect of retirement on the poverty line.
For this reason, it is more important than ever that women not only take an active interest in their finances, but take control of them.
Gender pay gap
Although it is decreasing, Australia’s full-time gender pay gap is still at 15.3%, meaning women earn on average $253.70 per week less than men. This gap seems to grow the more senior you are – the gap for managers was 28.8% in 2017, translating to an average difference of $53,081.
This gap often puts women on the back-foot financially, from the start of their careers, and that is why it is crucial for women to have good financial literacy and control over their finances from an early age.
Taking time out of the workforce
Today, there is greater balance between genders in terms of caring for children in the home than ever before, and we are seeing more companies implementing flexible parental leave policies to enable both genders to spend more time as the primary carer. A great example of this is PWC, who have introduced a more flexible parental leave policy that entitles all new parents, male and female, to 90 days leave which they can take in one block or 2-3 days a week over several months.
This is a step in the right direction, however, the reality is that the vast majority of primary caregiving is still provided by women (96%, according to Australian Bureau of Statistics). Whether a female steps out of the workforce for 3 months, 12 months or 12 years, it has a financial impact on the overall household income, as well as their individual superannuation funds.
It can also be difficult for women who take time out of the workforce to re-enter at the same level and continue on the same trajectory as when they left. The culture of an organisation, nature of the role, and staff can change significantly in 12 months, and many find themselves in a very different place to when they left.
With all these considerations, and the fact that almost 50% of female workers are in part-time employment, it shouldn’t be a surprise that women are expected to retire with $200,000 less than males.
Unplanned life events
Life doesn’t always go according to your plan. Unfortunately, many of us will be affected by unexpected events, like redundancy or illness, ourselves or within our families, leading to extended periods with limited or no income. If you are living hand-to-mouth, with nothing saved for a rainy day, then this can have a huge impact on your financial security.
This is the same when it comes to divorce; most couples don’t plan for it, but the fact is, one in three marriages in Australia end in divorce. It’s a financial stress that most people aren’t prepared for and can have a significant long-term impact.
To address these challenges, it is important that women stay on top of their finances. Here are our top tips:
Know your worth at work
Don’t undervalue yourself. Negotiate your pay – be aware of what you are worth to your employer and make sure they are aware too.
Set some financial goals
Take the time to understand your financial position, create goals, and make a plan to achieve them.
Get your superannuation on track
Do you know how much you have in your super account? Do you have multiple accounts? Firstly, review your current super balance and contributions and consolidate accounts if you have more than one. Once you have the basics sorted, take a look at the government tax concessions for additional contributions and work out how you can grow your super funds, while still living within your means.
Plan for the expected and the unexpected
If you’re planning a family in the near future, prepare carefully before you take time out of the workforce. Understand your government entitlements and your employer’s policies, and, if you can, top up your super either before you leave or after you return, to make up any shortfalls. While by their very nature, you can’t entirely prepare yourself for unexpected events, it’s always a good idea to have an emergency fund, and the right level of insurance to protect yourself and your family so you don’t get caught out.
If you’re in Melbourne and ready to take control of your career and finances, come along to our complimentary workshop, where career and leadership coach, Alma Besserdin, and financial adviser, Emily Lanciana, will discuss strategies to improve career progression and provide tools and tips to help you take control of your finances today, while planning for tomorrow. Register here.