Women and money
Compared with their grandmothers, Australian women are generally better educated, better paid and have many more career opportunities. This financial independence means women today must also make financial decisions their mothers and grandmothers could never have imagined.
Many women also take time out of the workforce at some stage to meet caring responsibilities. This affects not only their income-earning capacity and career options, but also the amount of super they will accumulate over a lifetime. Most Australian women can now expect to outlive men, and need to think about how to support themselves in their senior years.
The different lives women lead and decisions they make can have a big impact on everyday money management, not to mention how much they'll have to support themselves in retirement.
Women share their money management tips with FIDO
Recent research also shows some differences between the way men and women manage and think about money. For example, women are generally confident about everyday money management issues like budgeting, but less confident than men when it comes to investing, understanding financial language and ensuring they have enough money for retirement.
More on what research tells us about women and money
FIDO's top 10 money tips for women
Try our Women and money quiz
More information and links
What research tells us about women and money
A 2008 Financial Literacy Foundation research report found that women are generally highly confident in their ability with money, especially when it comes to everyday money management issues like budgeting, saving, dealing with credit and managing debt.
But they’re less confident when it comes to investing, understanding financial language and ensuring they have enough money for retirement.
Among other findings were that women think it’s important to learn more about money management issues such as planning for the financial future, understanding rights and responsibilities when dealing with money and ensuring enough money for retirement.
However, many women were found to hold attitudes and beliefs that can get in the way of them managing their money better – from thinking it doesn’t matter to finding it stressful, uncomfortable or boring.
For instance, 52% said that dealing with money is stressful and overwhelming (men 43%), 42% reported that thinking too much about their long-term financial future makes them uncomfortable (men 37%) and 34% found dealing with money boring (men 29%).
Download the Financial Literacy Foundation Report
FIDO's top 10 money tips for women
1. Start a savings plan: it's easier than you think
2. Train your credit card: keep debt under control
3. Learn about your super
4. Don't wait for prince charming
5. Invest in your super
6. Consider other types of investing
7. Plan ahead for life events that may affect your income and super savings
8. Talk about money in your relationships
9. Teach kids the value of money
10. Plan ahead for your retirement
1. Starting a savings plan
- Use FIDO's budget planner to help you get a clear picture of your spending habits and find ways to make savings.
- Find out if you have any lost super.
- Identify some saving goals – that way you'll be more inspired to save.
- Shop around for bank accounts with higher interest rates and lower fees and charges.
- Set up a special high-interest savings account and arrange for a regular direct debit to be made into this account from your salary.
- Learn about ways to invest for the longer term, including through your superannuation.
2. Train your credit card: keep debt under control
- Try and pay off your credit cards in full as soon as you can - the longer you take the more interest you'll pay.
- Use FIDO's credit card calculator to see how minimum repayments increase your debt. The calculator can also help you find ways to pay off your card faster.
- Reduce the number of credit cards you have.
- Consider using a debit card instead of a credit card. That way you can't spend more than you have.
3. Learn about your super
- Read FIDO's booklet Super Decisions to learn all about your super, including how tax concessions and other government benefits make super one of the best, long-term investments around.
- Read your member statement when it comes in each year so you know the balance at the start and end of the period it covers, how much your employer has contributed and how much you might have contributed yourself. Look at what the fund has earned on your money and make sure you understand what fees and charges you are paying.
- Find out about your fund by reading its annual report, browsing its website and having a look at its performance each year, keeping in mind that it's a long term investment. Read more about taking the ups and downs of super in your stride.
- Consider rolling your super into one account to reduce the amount you pay in fees and charges. Check whether you'll have to pay exit fees to do this: sometimes these fees outweigh the benefit of consolidating your super.
4. Don't wait for prince charming to sweep you off your feet
- Around one in four Australian women never marry* so don't delay your financial plans until you meet Mr Right.
- Take control of your own financial destiny by forming a relationship with your financial planner instead. Check ASIC's licensee register to ensure the advisor holds an Australian Financial Services Licence or is the representative of a licence holder.
- Read FIDO's key tips on getting advice
*ABS Cat 4102.0 – Australian Social Trends, 2007
5. Invest in your super
- Putting a little bit extra into your super each fortnight can make a big difference over the long term. Better still, you might also qualify for some tax concessions.
- Consider asking your employer about salary sacrifice – by making a regular voluntary contribution from your pre-tax income, you'll really boost your super savings over time.
- Depending on your income, after-tax super contributions may mean you get the government super co-contribution. If you are eligible and earn less than $28,980, the government will match every $1 you contribute to super from your after tax money with $1.50. Read more about the Government's co-contribution
- Check the Tax Office website to find out about how your spouse can make contributions to your super.
- Read ASIC's superannuation tips for women
6. Consider other types of investing
- Investigate all the investment options available to you in addition to super by reading FIDO's investment pages. If you do chose to invest your money, do it with your eyes open and understand the risks involved.
- Before you invest, have a financial goal in mind. You might be looking for a secure income for your retirement or perhaps you want to get together a deposit for a house or fund a renovation.
- Work out how much money you want to end up with, then think about getting professional advice from a licensed financial adviser to help you develop a suitable investment strategy.
- Don't put all your eggs in one basket - a good way of managing investment risk is to spread your money between different investment types, such as cash, fixed interest, property and shares.
- Educate yourself about investing by doing a short course from a reputable organisation, reading the financial pages in newspapers and subscribing to FIDO News, ASIC's free monthly email bulletin for consumers and investors.
7. Plan ahead for life events that may affect your income and super savings
If you have a baby or need to take time out of the paid workforce to care for someone or for other reasons, it's well worth planning in advance so that you can work out how you will continue to meet ongoing financial commitments.
- Use FIDO's budget planner to identify how much money you'll need to cover your expenses and how you might make savings. Identify what your new sources of income will be once you reduce your working hours or stop working altogether.
- Reduce your debts as much as you can while you are still earning a regular income.
- Find out what parental leave your employer offers. If you're entitled to paid parental leave, you may chose to have payments made at half-time to make this income last longer.
- Contact Centrelink to find out if you are entitled to any government assistance. If you're having a baby there are a range of payments you might receive. People caring for a sick relative could also qualify for some kind of regular payment as well.
- Before taking time out of the workforce to have a child, try living on a lower salary for a few weeks in preparation for your new financial circumstances. You could even use the period of pregnancy as a time where you try and live on what your new salary will be once you stop working and save the difference.
8. Talk about money in your relationships
Talking about money can be stressful, especially if you and your partner have different spending habits and money styles or if you are having trouble dealing with debts. Dealing with the financial demands of your children and other family members can be difficult as well.
- Talk about money and your relationship goals with your partner and family.
- Try and develop a shared attitude to debt and agree on what your household can and can't afford.
- Get your partner and kids to work with you on developing a budget for your household.
- If you and your partner have different attitudes to spending and saving, try and work out ways to handle this conflict so you can find common ground.
- Think carefully before you agree to guarantee a loan for your partner or family members – if things don’t go according to plan and the borrower can't repay the money, you will have to pay back any loan you've guaranteed.
- If you need help with a debt or money problems, think about seeing a financial counsellor.
If money issues are a source of conflict in your relationships, a relationship counsellor may be able to help you.
9. Teach your kids about money from an early age
By discussing money openly and involving your children in the family budget from an early age, you'll help your kids learn the value of money and develop good habits for their future.
- Teach kids how to compare prices and shop around.
- Include your kids in conversations about the family budget and bills.
- Get your kids into the savings habit by helping them start a savings account.
Read FIDO's tips on talking to your kids about the value of money
10. Plan for retirement
It's never too late to take charge of your money. No matter what stage you're at in life, a few moments today spent thinking about your retirement goals and how you plan to manage your retirement savings through super and other investments you may have could make a big difference to how much you'll end up with later.
- Reducing debt is one of the best ways to save (including for retirement). Try and keep debt to a minimum and when you use credit, pay if off as fast as you can.
- If you have a mortgage, making additional payments whenever extra cash comes your way could help you to pay it off faster, reducing the amount of interest you have to pay. Read FIDO's tips on how to pay off your mortgage faster.
- FIDO's Retirement Planner can help you calculate how much money you'll have in your retirement depending on what you put in today. Give it a go and you'll be sure to agree that making extra contributions to your super now is well worth it in the long run.
- Will your money last as long as you do? Read what our actuaries have told us about life expectancy and what this means for your retirement savings.
- Contact you super fund to find out how much super you have. Consider contributing as much as you can to your super to make a difference to your retirement income. If you are 60 or over when you retire, the super benefits you receive will be tax free if you receive them from a taxed super fund.
- If you are approaching retirement in the near future, read FIDO's retirement pages.
Women share their money management secrets with FIDO
Since she married, Sally (50) has continued to manage her own financial affairs
I've always had my own income and my own bank account. That is very important to me. I don't know whether other women feel the same, but my husband and I have a joint account, and then I've got my own account for my clothes and anything else that I choose to buy.
Sacha (28) is looking ahead to when she and her partner have children
You hear that the cost of putting a child through school these days is something like half a million dollars, from the day dot right till the end of uni. Whether it's true or not, it's an indicator of how expensive it is, so we want to prepare for that. If I was to fall pregnant at some point and we were to have a child, we would hopefully be in a situation where Andrew could support us while I am not working.
Sandra (35) recommends that people educate themselves about money
When you're considering doing something with your hard-earned cash, I think it's important not to be misled by real estate agents or advisers. Seek independent advice and do your sums, and to look around you. See what your friends and family are doing, and whether you can pick up some skills that way. If you've got a job, talk to your colleagues and see where they are. Read newspaper articles and the Australian Financial Review. Just be aware.
Mortgage rate hikes have squeezed Diane's (43) budget
I'm now paying a good deal more on my mortgage than I had planned for when I took out a home loan so things are tight. I've really fine tuned my budget and worked out what my fixed expenses are. I've also identified my variable expenses, so in my budget I can see each item separately. With food money and bill money, I now have a set amount that I can spend each week. If I happen to spend more than this allocated amount in any area, I have to borrow from one of the other areas. Recently Ive fallen back on my credit cards, but I've reduced my credit limits quite significantly to make sure I don't get into too much trouble there.
Susan (25) says forward planning is the key to saving
If you’re too carefree with your money, you might have no idea what you spend your money on. You need to plan ahead to cover your expenses and find ways to make savings. Once you do a budget and look at the big picture, you'll find there’s definitely ways of saving money. Ask yourself: “Do I want it, or do I need it?” If you want to save, try only buying things you need for a while – you'll be surprised how much you can let go if you really need to find some extra cash. Part of my weekly budget involves saving and I actually get quite adamant that I need to save now.
When Judith (32) left work to have baby she hadn’t planned ahead
I could have kicked myself for not budgeting as well as I probably should have. I continued to spend my salary like it would never end. Then, all of a sudden, there was just no money. I didn’t have money for lots of day-to-day things, and being a single parent it really was very hard. I had to get my budget down to the minimum amount to survive. I kept fine-tuning it and cutting expenses until I worked out what my ongoing essential expenses were. It was a shock to the system I can tell you.
Lost super an unexpected windfall for Fiona (46)
I received a letter from the Tax Office telling me that they had located some lost super. I didn't pay much attention as I was pretty sure that I had tracked it all down. Then one day I thought I'd better call them just to be doubly sure. I spoke to a very pleasant women who said that yes, it definitely was lost super and that I could get it back. After verifying some membership numbers and personal details, she informed me that I would get a super boost worth $8000.00 into my current super account. I was thrilled!
Christina (63) opted for a debit card when she retired,
I moved from having a credit card to having a debit card so that I don't have to worry about that credit card bill. It also means that I have to be fairly conscious of what I am spending. It's a self-restraining mechanism for a self-confessed shopaholic - I just love shopping, especially for shoes!
Solo mum Joan (35) finds it hard to pay off her credit cards
I've never, ever, paid off my credit cards within the interest-free period, not once. In the beginning, my credit cards were meant to be for emergencies, but somehow, my debts crept up very quickly and very easily. I got into trouble a few years ago when I was spending more than I earned. I went to Bali, for example, and put the whole trip on a credit card. The amount I owed ended up being around $5000. I didn’t think about it at the time. I really didn’t care. It’s only afterwards - you start to think about it when reality hits, you know, because you’re having a good time when you're spending the money.
Diane (45) was cautious in her approach to investing.
I started to invest last year when I realised that my super would certainly not be enough for me to be comfortable in my retirement. I didn’t want to go for anything that was high risk. I told my brokers that I wanted a gradual return over a long period of time, and they were fine about this. They didn’t try to push me into the high risk investments at all.
Susie (42) likes the idea of responsible investing
I have been reading a lot about responsible investing and how you can put your money towards projects that are going to have a positive impact on the environment or society. There's a lot of greenwash around so if you do want to invest your money in a way that you think is ethical, you really have to do homework and find out what the companies you are investing in are actually doing and how thay do business with suppliers and so on. There's a lot more to it than just ticking a clean and green box. Thankfully it's a growing area so there is lots of information out there about how to vet companies.
Trusting her financial advisor is important for Christina (60)
When choosing an advisor, we had to really like and trust and feel comfortable with the person that we chose, and I think people need to remember that. It's to do with your relationship with that person and, if you don't trust that person, they shouldn't have your money.
More information
Women understanding money - information sheets from the Understanding Money website
Women and debt brochure (Women's Information Referral Exchange)
Women and Superannuation: Taking control of your future (Australian Taxation Office)
Centrelink
Office for Women
FIDO Website: Printed 11/20/2008
