A Husband is not a Retirement Plan

Unfortunately most women will face immense challenges as they reach retirement due to an imbalance in superannuation savings between men and women. The gap between men and women is said to be approximately 46% which leave many women reliant on their spouse and/or the age pension in retirement.

Why is there such a gap in savings for retirement between the genders? That is a broad answer but can be mainly attributed to these factors: career opportunity; more women in part-time work; women are working less hours than men; earlier retirement; and unfortunately the ever increasing reason:- Divorce. Most females will succumb to one or all of these factors in their work lifespan.

Women, often commonly referred to as mums, are generally the primary care-givers in the family so this cuts into their career opportunities, length of working life, and therefore their earnings potential and super contributions as a result. That’s fine if you have planned for this when you and your spouse retire. But what if your relationship doesn’t go the distance?

Whilst divorce rates have decreased ever so slightly over the past few years, the rate is still 1 in 3, meaning it is more likely for women to end up single prior to retirement, or not being able to retire at all. If you are one of the fortunate ones who stick it out, or even better truly love and trust your partner, then you will be in a situation of mutually funded retirement. Congratulations.

Not wanting to spread doom and gloom here to the female population but women tend to outlive men so your planning needs to take into account that alone time, personally and financially too.

There are so many variables as to why the female population may end up short-cashed in retirement, and it’s ok, really. You just need to plan ahead. Think about the what-ifs: What-if you don’t earn enough to generate enough Super, what-if your partner does leave this world prior to you, or what-if your relationship doesn’t make the distance?

Plan, plan and more planning. You need to establish your our financial retirement identity and plan. Here’s is where I can help: My name is Karen Vickers and I am a single mother who has faced many of the challenges above. I am also a financial adviser with many female clients and I am passionate about helping and educating women to take a hold of their own financial future. If you need any help with establishing a personally financial secure future, please do not hesitate to connect with me at ARC Wealth and we can discuss it confidentially.

If you want to start with some self-education then here’s a helpful downloadable guide: 6-steps to Financial Security, a Free e-book from Your Money Sense. It’s a good starting point to get you in the right mindset to manage your money and build your own retirement nest-egg.

Overspend once in a while, it’s good for you.

Imagine going to the shopping centre on Saturday and buying whatever you want: An iWatch, or even a new iPhone, that handbag you keep eyeing off as you walk past the store, a new jacket, or the latest sports shoes. Put it on your credit card, or split it over two credit cards, then it won’t seem as bad when you look at the statement.

We’ve all done it and it feels good. Coming home with bags of goodies, trying them on in secret, then when quizzed weeks later “When did you get that?” you retort “This old thing”. Haha, they’ll never know. Surely you’ve heard the old saying that “You live up to your income”, as your paycheque or income rises, so does your lifestyle. There’s nothing wrong with living well.

But, and there is always a But… that one-off spending spree is very rarely a “one-off”. It is addictive and gets the pleasure endorphins pumping. “Why not do it again, next week, it was fun and there’s still credit available on the card” And on top of all that the airlines are giving you reward points! Why wouldn’t you use your card?

Did you know that Australians owe approximately $32,673,480,146 in credit card debt as of this morning. Here’s an easier number: Thirty-Three Billion Dollars. Personal debt per credit card holder is $4301.00 with an average of $723.45 in interest per annum. Yikes!

For many of us refusing to use a credit card is simply not an option. Without one it’s difficult to pay bills and even make reoccurring payments. So use it for that and not for shopping. What should you use for shopping and spending I hear you murmur sarcastically, Use a debit card. You can’t spend more than you have in the bank that way. You’ll find you will spend less and when you next look at your bank statement you’ll even question what you are buying and maybe start to budget.

While you’re at it, have a look at your monthly credit card statement. It shows how long it will take you to pay off your balance and how much interest you’ll pay if you only pay the minimum each month. (The short answers are “forever” and “heaps.”)

So overspending once in a while is good for you; hopefully it shows you how addictive it can be and gets you to review the financial consequences of that binge. Although a “once-off” may not impact you that much now, think about those endorphins that are working to create a monster, and there’s nothing more destructive than a spending monster. What about all that money you are spending on short term pleasure, and could be using toward the car, or house, renovation, holiday: the big ticket items that need saving for. Shame as those would be long term memories, not just a Saturday of short term pleasure.

What can you do to resist the “spending-money-I-just-don’t-have” urge?

Firstly use your debit card more than your credit card. Secondly put a simple budget in place, and then you’ll know what you have to spend, and what you don’t. We like to call a budget ‘Your Spending Plan’ as that is what we are all working around: Spending.

Here’s a helpful downloadable guide to control your spending and build your savings. 6-steps to Financial Security, a Free e-book from Your Money Sense. It’s a good starting point to get you in the right mindset to manage your money.

So next time to go for a bender at the shopping centre, take a few deep breaths before walking in and think about the long term financial goal.

And the Survey Says . . . One in Five Aussies don't have enough savings.

An Ernst & Young survey of almost 5,000 people, commissioned by BT, found that 17% of people would struggle to find $500 to $1,000, while 30% had no money left over for savings.

It claimed that almost one in five Australians would struggle to come up with $1,000 to cover an emergency expense, while one in three people live from paycheck to paycheck, spending everything they earn, according to the survey.

More than 40% said they were able to meet their normal monthly expenses, but a third admitted they were worried about their ability to do so. At time of publishing the report it was said that the results clearly showed there are a large number of people who struggle to cope financially, and the problems are not always linked to the size of their pay-cheque. In many instances people are living in the hope that they will achieve their goals rather than planning for a fulfilling and secure future.

57% of those surveyed had no regular savings plan, and peaked among 45 to 54 year olds, who are often nearing the peak of their earnings capacity.

Close to 40% of people would be unable to maintain their current lifestyle if they lost their income for three to six months, thanks to not enough savings.

So how do you counter that?

Put a simple budget in place, as you never know when your financial situation can and will change. We like to call it Your Spending Plan as that is what we are all working around: Spending.

Here’s a helpful downloadable guide to control your spending and build your savings. 6-steps to Financial Security, a Free e-book from Your Money Sense. It’s a good starting point to get you in the right mindset to manage your money.

Are you a shoebox culprit?

So what is it? It’s the practice of throwing everything that might be important, like invoices and receipts, into a box and giving it to your accountant to sort out.

When someone refers to the “shoebox” in relation to your accounts or finances it means that the person has procrastinated doing their accounting by simply dumping the paperwork into a single place (better than scattered, but only barely) and deciding that they will address it at a later date, at which time it will likely be too late to fix any problems and bills which may be incorrectly billed for example. The implication is that the business suffers as a result because performance isn't being measured and problems aren't being addressed.

The other implication from the accountant's perspective, or even yourself if you are doing your own accounts, is the time to sort it all out can quadruple compared to being given all that information in order; say date order.

So how do you avoid becoming a shoebox culprit? You may enter your invoices and receipts into myob or xero yourself, or have a book keeper do it or hold it all for your accountant to do. Whatever your method is, a little foresight and time attention goes along way; both in time and cost. It’s as simple as buying a ring binder and hole punch. When you get a bill or receipt, punch it and stick it in the folder. Get into a routine of doing that every day or at least once a week. It will take discipline but will also save some serious headaches, and potentially financial losses, at tax time.

A good start to managing your financials is by downloading our Free Your Money Sense e-Book: “6-steps to Financial Security”.

So, are you a shoebox culprit?

What is Purple Rain?

It could well be the tears of regret that potential beneficiaries of Prince’s are shedding having missed out on a slice of a $300 million dollar fortune. This kind of shows the importance of having a Last Will and Testament in place. Not everyone will die at 82-1/2 years old (average Australian lifespan) so it’s best not to wait until then to set up your will.

Having grown up with Prince’s music, yet not really following his career, I recently read his biography in Rolling Stone and was blown away at the artistry and creativity of this musical legend. His career was constant from his first days of self-learning piano at the age of 7, guitar at 13, and drums at 14 to his last days, still writing and performing.

Wow, no wonder he had no time to get his affairs in order. Maybe, being so ensconced in his career and creativity, he didn’t have or allow managers or financial advisers around him to insist that he did get his fortune sorted. We may never know why Prince left it all that way, but we must take a lesson from that and ensure we do get our own affairs in order.

A step before setting up your will is to get your finances organised. There is no point leaving your loved ones a mess to sort through, or god forbid fight over. This can be as easy as establishing a simple budget to follow each month, or even enlisting the help of an accountant or financial adviser. If you don’t already have a financial plan, or as we often like to refer it, a “spending plan”, you can start it at any time. That way you can see at a glance, what you are spending, saving and investing (if you get to that stage).

I won’t go into it here but it’s quite easy to avoid the Purple Tears of regret and get yourself sorted and setup financially, for the benefit of your loved ones.

A good start to understanding the savings/spending process is by downloading our Free Your Money Sense e-Book: “6-steps to Financial Security”.