Tag Archives: Women in Finance

Make Australia save again

By Robert Wright /September 02,2019/

Are you one of the 20 per cent of Australians with less than $250 in their savings account?

Recent research from AMP Bank has found that one in five Australians isn’t saving any of their monthly income.

And we’re all different when it comes to saving. People in Tasmania and Western Australia have the least amount of savings, while men on average have nearly 20 per cent more money saved than women. Unsurprisingly, young people (those aged 18 to 24 years old) have the lowest savings balances with nearly a third having less than $250 in a savings account.

Why are we saving so little?

With low wage growth and the cost of living increasing, it seems Australians’ savings habits are changing.  AMP Bank’s research found that people’s wages are mostly used for everyday living costs and bills, while other costs such as school and day care fees were also called out as factors preventing people from saving.

Another reason people aren’t saving is that they’re actually paying down debts, such as their home loan, faster, due to our record low interest rates.

But we need to save to make sure our financial wellbeing is taken care of. As AMP Bank CEO Sally Bruce points out, “For most Australians, having a pot of money to use when times are tough or to fund the nicer things in life such as a new home or a holiday can have a huge impact on health and morale as well as your wallet.”

Saving for holidays and rainy days

Saving is an important part of our finances. It gives us a safety net when we need it or allows us to have enough money to afford the big things.

According to the moneysmart website, the top three savings goals of Australians are:

• Holidays. Whether close to home or on the other side of the world, a holiday is what a record 53% of people indicated they are saving for.
• Rainy day fund. 46% of people nominated a rainy day fund, or emergency fund, as their top priority for savings.
• Buy or renovate a home. The dream of owning property is still a goal for most Australians, with 40% of people saving to buy a home or renovate.

So what steps can we take to start saving?

• Find the right savings account to suit your needs. There are many different savings accounts available to you. Online savings accounts and term deposits could offer higher interest rates than a typical transactional account.
• Set a savings goal. Identifying your savings goal is the first step in creating good financial habits, plus you’ll know exactly how much you need and when you need it by so you can commit to reaching your goal.
• Work out where the money will come from. For most people, this might be the money left over from their pay after they’ve covered all their bills and expenses each month. You could also think about getting a side gig for extra income, or cutting back on spending to free up more money.
• Set up a regular savings plan. Once you’ve identified your savings goals, you’ll need to work out the best method of saving for you. The way you save might differ depending on whether your saving goals are long term or short term. For example, a separate savings account where your money is readily accessible might be useful for a short-term goal. A term deposit, where your money is tied up for a set period of time in return for higher interest, might be more suitable for a longer-term goal.

Make sure you’re getting the most out of your savings account

According to the research, more than a quarter (26%) of Australians currently don’t have a savings account. Of those who do, nearly half (43%) don’t know their interest rate.

As Ms Bruce explains, “The more we can encourage Australians to take an interest in interest, the more they will be able to grow their wealth and reduce the impact of unexpected costs or afford the extra things in life they want.”

So, when looking for a savings account, some important features to consider are:

• Does it offer attractive interest rates?
• What fees might I be charged?
• How do I access my money?
• Is there a minimum or maximum amount of funds allowed in the account?
• Will my savings be secure with the financial institution I choose?
• Read more about choosing the right savings account for you.

Saving is an important part of your financial success. Making small changes to build that safety net could help to improve your financial situation.

Source: AMP, June 2019

11 steps to financial independence for Australian women

By Robert Wright /July 01,2019/

Being financially independent is a mindset that many women are aspiring to, particularly those in relationships.

While your job, or your partner’s career is secure today, tomorrow it could be a different story, and often that can lead to a complete switch when it comes to who’s bringing in the money.

Equally, divorce rates still tell a story where almost 50,000 Australian marriages broke up in 2017, and quite often this means that assets are split and the need for both parties to work becomes a reality.

Research from Canstar suggests that we are seeing a rise in the number of women who are their household’s main breadwinner.

With this shift comes the need for women to be financially savvy and have equal control of the family finances.

To achieve financial independence and importantly have the right mindset, here are 11 things that every woman should be aware of.

1. Earn your own money.

Unless you are very wealthy in your own right, it is very difficult to achieve financial independence if you aren’t earning any income.

2. Don’t drop out of the workforce.

Many women will take time off to care for children and loved ones, but keeping a foot in the door, even if only part-time, can greatly enhance your income earning potential, not to mention help your skills stay relevant and grow your network.

3. Know your financial situation and be in control of how you spend.

That includes understanding how much money is coming in such as your weekly/monthly expenses, and how much is going out.

4. Know your good from your bad debts.

Good debt is often used to help build long-term wealth and bad debt can erode that financial security. For example, taking out a loan to study a course that will eventually lead to a career and provide you with a decent income is a good debt, but a credit card or personal loan with a high interest rate that applies to a depreciating asset such as a car, is considered a bad debt.

5. Have plans in place to be actively paying off your debts.

This could include your credit card, which could have an interest rate of up to 20%, and your home mortgage—even if it is considered a good debt with a lower interest rate.

6. Understand that renting is okay but owning a home could be better.

If you don’t own a home, there’s nothing wrong with renting. But be aware that paying for any accommodation, whether it’s rent or a mortgage once you reach retirement age and are no longer working, can be very expensive and drain your savings.

7. Have a plan for investing.

You might consider holding other assets like a share portfolio that can provide you with income via dividends.

8. Ensure you have an equal say in relationship/family money decisions.

Be realistic about periods of financial dependence but don’t undervalue your voice. When you are in a relationship, there may come times when you need to rely on a partner for financial support. This can happen at various life stages and even unexpectedly if you are unable to work for medical reasons.

9. Engage with your superannuation.

Log into your account and get to know how much you have and what your fees are, as well as your insurances, investment options, returns and nominated beneficiaries. If you’re not happy with what you see, take control to change it.

10. Take control of your finances by researching your options or seeking help.

In this day and age it is almost too easy to do your own research on financial products such as finding the super fund or cash saving account that meets your needs. And if you can’t find the answers yourself, then seek professional advice.

11. Don’t ignore your rights.

Never sign yourself up to a payment plan or a contract without reading the fine print and fully understanding how your financial security may be impacted—for better or worse.

Source: AMP, May 2019