Take a lead from women who’ve learned the hard way and set up yourself up for a brighter financial future with these 7 important money tips. Money: we all need it, want more of it but never fully understand it. And often what we do understand comes from cleaning up poor decisions.
Here are 7 key pieces of advice that successful women have in place but wish they had known much sooner:
1. Get in early
If I had saved up a dollar from every person who said “I wish I met you 5 years ago” or “I wish I read your book earlier”, I’d probably be living in my own palace on the French Riviera. The early you start taking an interest in your finances, the better off you will be, thanks to the compounding effect (the more you have invested, the more you earn on them). Even $20 a week compounds into an enormous amount of money over your working life, but you won’t even miss it.
2. Build good foundations
If something goes wrong at the top, without good foundations in place, it all comes crashing down. It’s the same with money as it is with construction. I’m yet to meet anyone who had their five money foundations perfectly sorted off their own bat:
- Have an emergency fund
- Implement a spending and investment plan
- Get appropriate insurance cover
- Make your superannuation work hard
- Get your estate planning in order
3. Investing isn’t just a man’s game
There’s a perception among many women that finance is a man’s game, an unworkable maze and financial advice is only for rich people. The result? Many single women ignore money matters, while partnered women often leave it to their spouse. But women are perfectly capable of understand finances and investments too! And there are female financial advisers (myself included) and accountants who specialise in helping other women build financial independence. Successful women tap into this earlier and reap the benefits: higher earnings, bigger retirement savings and better financial savvy should their relationship breakdown.
4. Don’t fall for the hype
There’s so much hype about investment schemes and ways to cut your expenses. But the devil is in the detail. A classic example is that you should “consolidate your multiple super accounts into one to save money on fees”. But that only works if you consolidate high-fee accounts into a lower-fee one. Plus, consider your insurances too like income protection – closing a super account automatically terminates insurances. Many women (and men) only discover this mistake after the fact when they need to make a claim.
5. Divorce is a money game, not just a legal one
When it comes to divorce, I’ve regularly seen women prioritising the legal matters while their ex-husband prioritises monetary ones. Perhaps it’s the mothering instinct to secure child custody at all cost. Or perhaps it’s due, at least in part, to gender visibility: the legal profession employs predominantly women; the financial sector is predominantly men. As a result, women often walk away financially worse off. The ones who come out of a divorce at least on par with their ex, if not ahead, tend to be those who sought out financial AND legal advice before agreeing to any settlement.
6. Ignorance ain’t bliss
Financial matters are complex and you simply don’t know what you don’t know. For instance, many women are surprised to learn that they are eligible to claim Centrelink payments for family tax benefits – (wrongly) believing they earn too much to qualify. Even if you are comfortable financially, leaving money on the table unnecessarily is a big opportunity lost. Educate yourself and seek help to fill in those knowledge gaps.
7. Seek qualified advice
Many people – especially women – turn to friends and family for advice on financial matters. But everyone’s situation is different. And rules around money and tax and super change all the time. If they aren’t qualified financial advisers or accountants, how can you be sure their advice is accurate? Successful women know this and seek out qualified, licenced advice that’s tailored specifically to them. But most will admit to wishing they had done so sooner!
Who is Helen Baker?
Helen Baker is a licenced Australian Financial Adviser and author of two books: On Your Own Two Feet – Steady Steps to Women’s Financial Independence and On Your Own Two Feet Divorce – Your Survive and Thrive Financial Guide. Proceeds from the books’ sales are donated to charities supporting disadvantaged women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Find out more here. N.B: Please note that this is general advice only and you should seek advice specific to your circumstances.
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