How to grow your wealth if you forgot to marry well – one for the ladies
11 Sep 2013
Are you still waiting for Mr Right to come along and make you financially secure?
Well I hate to say it but times are a changing. The old norms of growing up, finding the perfect partner, marrying, having kids and living happily ever after are now no longer for everyone. The new norm is there is no norm.
In the 2011 Census it was noted that over the last 50 years single households had risen from 11% in 1961 to 24%.This is 1.9 million single households – the majority being older women since we live longer than men.
The average marriage age has also risen to 27.9 years for women but in many cases saving is not high on the list of priorities before marriage. In married life work patterns change, caring for your children become a priority and casual and part-time work more common. Sadly not all marriages last leaving many women alone later in life with less superannuation due to broken work patterns. All too frequently we are not necessarily in the position of having a decent income for retirement or the time left to rectify the situation.
To compound matters, although we have made tremendous progress towards equality, there is still an average wage gap of 17.5% between men and women.
With all of these factors comes the realisation that we have to look after our own finances – whether we are single or married, we cannot assume someone will look after us later in life. Would you be able to live on a Centrelink pension of $772/fortnight or $55 a day?
Here are five tips to help you start planning your future.
1. Create a budget
A budget will help you work out what you spend and determine what are essential expenses, what are the expenses which make life enjoyable and what should be occasional luxuries rather than everyday events (I shall refrain from adjudicating which category shoes belong in!). Here's a budget planner to get you started.
2. Start a savings plan
Once you have completed your budget, you can work out an achievable savings plan. The trick is to avoid temptation and set up a direct transfer from your working bank account to a savings account. Internet savings accounts can be a great option as they pay a better rate of return than a normal bank account. Term deposits are also good as they help lock away your monies from temptation.
When you have built up a reasonable savings account you can then explore other investment options such as buying an investment property or starting a share portfolio.
3. Maximise your superannuation
Superannuation is a great vehicle for accumulating wealth in a lower taxed environment. In retirement it helps make your monies last longer as it is then tax-free - both on investment earnings and what you take out to live on.
Your budget will help you determine if you can both add to superannuation and also have a savings plan. Both are great options. Superannuation mostly wins from a tax point of view however the monies are locked away until retirement. Though this can be a great forced savings plan, it is also important to have savings external to super until closer to retirement.
Super options to explore are:
- Salary sacrifice contributions – for higher income earners these contributions can reduce your overall tax without major impact on your take home salary
- Non-concessional contributions - personal after tax contributions can, for those earning less than $46,920, entitle you to the government co-contribution of up to $500.
- Spouse contributions – if you earn less than $13,800 your spouse may be eligible to pay a superannuation contribution for you and claim a tax deduction.
- Lost superannuation accounts - there is still over $17 billion in unclaimed super monies. Use the Australian Taxation Office site SuperSeeker to see if any of these accounts are yours. All you need to start your search is your tax file number, date of birth and name.
4. Seek financial advice
Never underestimate the benefit of seeking financial advice. A good financial plan can help you work towards your goals in a measurable and achievable way.
Having access to a financial planner will also provide the peace of mind of knowing your financial affairs are being overseen on an ongoing basis ensuring you do not miss out on any opportunities appropriate for you.
5. Start now
Yes I know Mr Right may just be around the corner but why take the chance? Small steps can make a huge difference so the sooner you start planning for your financial future the more rosy it is likely to be.
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