GENDER AND PERSONAL FINANCES
I regularly meet with women looking for advice around their personal finances; no two situations are the same, but their starting point is a common one. To understand, and then leverage off, their financial fundamentals.
Hitting financial goals such as buying your first home or taking on further education become less intimidating when you take the time to understand your personal finances and how you can use this knowledge to get yourself where you want to be. Having a budget is a great place to start and a great visual indicator to determine how big the gap is between your current situation and your future goals. The outdated notion that women are poor money managers is finally being put out to pasture; we tend to ride the guilt trip when it comes to money, particularly if we do not have savings, but we now have a wide array of online tools to help us along by tracking our spending and savings. Having these tools at our fingertips alleviates some of the guilt associated with managing money because it is now widely acknowledged that we all need help along the way; very few of us are money experts!
Acknowledging that you need help managing your money can feel incredibly empowering. Once you have made the decision to help yourself, you can sit down and work on a plan which can guide you on your chosen path to financial success. If you read that and think, “I don’t have time for that” then keep it even more simple; at the end of each day write down everything you spent money on and repeat for 30 consecutive days. At the end of the 30 days, grab yourself a glass of wine, sit down and take some time to evaluate your spending. This tends to be an eye-opening experience because it not only shows how much you have spent but also what your money habits are.
Once you understand your in vs out cashflow habits you can better categorize your spending and look at the cash which could be saved and used for upcoming expenses. This challenge is very effective when it comes to understanding your needs (ie, your cost of living) vs your wants (non-essentials).
Understanding your money is becoming increasingly important. On average, women tend to have less super for retirement, yet we are also likely to outlive our male counterparts. This means we need to take a more active approach in our future retirement planning because we have a big financial gap to fill if we are to have a comfortable retirement. This is where professional financial advice can come in handy. An expert in this field can help you to consider alternative ways to fill the financial gaps, for example, via shares or property. Figuring out which path is best suited to your situation can be overwhelming but if you can arm yourself with information, you will feel a lot more comfortable in choosing financial options which you are comfortable with.
Another source of information which many women tap into are friends and family. Both can be a great source of financial information. But it is important that you take this information as something which worked for them but may not necessarily work for you. There is no ‘one size fits all’ solution when it comes to money. Finding a professional you can trust to help you navigate through your finances can be immeasurably valuable to your financial future.
The key takeaway is to start small but start now. Put yourself in the driver’s seat when it comes to your personal finances and what you hope to achieve for the future.
Written by Rebecca Hollis, Financial Adviser (Milestone Financial)
Milestone Financial Services ABN 68 100 591 508 trading as Milestone Financial is an Authorised Representative of AMP Financial Planning Pty Limited, ABN 89 051 208 327 AFS Licence Number 232706, Level 8, 33 Alfred Street, Sydney NSW 2000, Australia.
This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. The examples used are illustrative only and are not an estimate of the investment returns you will receive or fees and costs you will incur.
If you decide to purchase or vary a financial product, your financial adviser, Milestone Financial Services Pty Ltd and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/ or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information on (02) 6102 4333.