Five tips to becoming financially fit - Women's Agenda

Five tips to becoming financially fit

Women face a myriad of financial issues during different phases of their lives. From marital status, through to employment status and even generational differences – each of these factors can affect a woman’s personal financial health.

A recent MLC Wealth Sentiment Survey found that while Australian women have greater financial anxiety around retirement income shortfall, we also give less consideration than men do towards forward planning.

The research found that 37 per cent of women are giving very low consideration to potential future financial setbacks. This is alarming. Whilst we have anxieties around retirement – it’s evident that many of us are still unsure on how to effectively plan for the future.

Financial fitness isn’t very different from physical fitness. We seem to understand what it takes to be physically fitter and to be ensuring we’re fit and healthy for our futures, however when it comes to financial fitness – we don’t always know what to do.

When it comes to exercise, you’ll often hear it’s recommended to learn to build up a jog, before embarking on your first run. Likewise with financial fitness, you first need to understand the process of what it takes before jumping into it head first.

Here’s my top five tips on how to become financially fitter, and to see you running a financial marathon before you know it.

1 Understand your current financial situation

Most women will manage their household budget from groceries to school fees, however it’s often the other half that manages the investments and assets. It’s important that you understand your current financial situation – from your superannuation through to assets, investments and what insurance you have. The first step to being financially fit is finding the time to take an active interest in your financial situation, and understand where you currently stand, relative to the lifestyle you would like to have in the future and in retirement. Liken this to having that first fitness appraisal at the gym and setting your goals.

2. Seek advice

So this is where the personal trainer comes in. Once you have set your goals, you need someone with the expertise to help you understand what it will take to achieve them. This could be your accountant, an adviser available via your superannuation fund, or your bank. Make sure it is someone you connect with, and is happy to charge you a fee for service (i.e. no product commissions). You want to be starting a long term relationship with this person.

3. Chunk it down

With your adviser, break down all the areas within your finances, and tackle each one separately. Take baby steps – you don’t have to do everything at once. Start perhaps by taking a look at your will, before moving on to your super accounts, life insurance or investments. Similar to planning to run a marathon – you need to have a step-by-step plan of attack on how to reach your goals, and this approach will help you build your financial muscle.

4. Review your super

Only 1 in 4 women believe they will have enough to retire, according to the MLC Wealth Sentiment Survey, which is an alarming percentage in comparison to men.

It’s important that you understand where all your super is. If you have more than one superannuation account, look to consolidate these into one account – it will save you multiple lots of fees and costs in extra insurance that you potentially don’t need.

Given consolidating your super can impact your insurances, make sure you discuss this with your adviser and understand what you are giving up before you do so. You can consolidate insurance at the same time as you consolidate your investments, which can be important given it is automatic cover (as in, you don’t need to be underwritten).

Also consider making additional contributions to your super out of salary sacrificing – to help ensure you have enough superannuation funds to last you through your retirement.

5. Ensure your insurance meets your family needs

Insurance is like your physio…..it protects the financial fitness you have built. It’s important to understand what insurance you have either within or outside of your superannuation, and match it to the needs of yourself and your family. We’re often great at insuring our cars and health, but rarely do we think about insuring our income.

Every woman’s financial situation is unique; her insurance needs are too. A woman may be single, in a relationship or married with kids. She may be the breadwinner in her household or working part time while the kids are at school. All of these situations can affect the type and amount of cover she may want.

The best way to ensure your wealth is protected is to discuss it with your adviser to gain an understanding of the insurances that are available and the things they cover. The adviser can help you understand your options in terms of cost and structure and help put a plan in place to achieve the outcomes you desire.

So, if you can start to think of wealth creation and protection as financial fitness, and build analogies (whether physical fitness or otherwise) that work for you, you can take the first steps towards growing your wealth and ensuring you have the future and retirement you are dreaming of. We work hard ladies and I really encourage you to find the time to make your money work for you

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