Lessons we can all learn from the "Forgotten Women"
“The greatest underutilised resource in our economy is mothers in their childbearing years,” lawyer Kate Asher wrote in this publication in 2017.
“We have told them since they were little girls that they can achieve anything in life. But after they become mothers, they discover the cruel truth: the system is rigged against them. We all know these women. Many of us are these women – the Forgotten Women.”
Sadly, things haven’t changed much in the years since.
The Forgotten Women sacrifice so much financially to raise their children – often while also caring for elderly parents or in-laws. The full cost of these sacrifices don’t become apparent until years later.
Compounding effects
Time away from work means no contributions going into superannuation and inappropriate investments eat away at what they did have. Coming on top of the gender pay gap, it leaves a massive retirement shortfall.
Many women returning to paid employment struggle to resume their previous career or full-time work, instead forced into less secure, lower paid part-time and casual jobs.
If student loans weren’t repaid before leaving work, those debts have ballooned under years of indexation.
We know women bear the brunt of domestic violence. Many marriages end in divorce once grown children leave home. Meanwhile, far more men die in their 50s and 60s – their pre-retirement years – than women, leaving many young widows. All these factors see women unexpectedly find their partner is no longer the source of income they had counted on. No wonder women over 55 are the fastest-growing demographic for homelessness in Australia.
What can we learn from this?
There are many things we can take away from the traumatic experiences of these much-maligned women. Chief among them: don’t be complacent. Maintain visibility of finances, and take action.
As a financial adviser, I have met lots of women; many who only sought advice after finding themselves in a financial black hole. I’m also passionately involved with various causes that support disadvantaged women and those fleeing violence. What strikes me about these women is that they almost unanimously say “I never thought this could happen to me”. And for many it can be preventable.
We must be proactive in looking after ourselves – our current AND future selves – which means developing our own financial independence. Simply leaving money matters up to our husband or partner is not an option.
We also need to get the message to friends, sisters, colleagues….
Breaking the cycle
Too many women have sadly come unstuck because they relied on weak financial foundations. Just like the foundations of a house, you need strong foundations on which to build financial independence:
- Emergency fund: a ‘get out’ fund should you ever need to flee danger (violence, natural disaster) or your household finances take an unexpected hit (redundancy, illness, another pandemic…). Not having readily available cash in an emergency can leave you stuck or forced to dip into investments or home equity, costing you dearly longer term.
- Spending and investment plan: more comprehensive than a budget, this plan offers visibility over your incomings, outgoings and assets. Visibility is key to cutting wasteful spending, staying on top of bills, and keeping you aligned on your money goals. Avoid sexually transmitted debt.
- Insurances: a valuable back-up plan to offset losses and help you recover financially from a disaster – personal and home. For women who are stay-home mums or carers, of particular importance is that your partner has life and income protection insurance, ensuring you can keep a roof over your head should they die or become unable to work, and possibly trauma insurance for yourself.
- Superannuation: Knowing up-front that you will have nothing going into super while you are not working means you can minimise the shortfall. For instance, consider ‘pre-paying’ extra contributions while you are still earning and/or have your partner make spousal contributions during your time out of work (and have them claim the associated tax benefit), and consider spouse splitting. But know what is happening in his super too, and if in your own business ensure contributions are made for both of you.
- Estate planning: Ensure your wishes are documented and your children are protected, both after you are gone and in the event you are ever incapacitated. Consider wills, guardianship, power of attorney, superannuation beneficiaries, and tax planning.
With good foundations in place, you can then look to other ways to build your independence.
Invest early. Savings and investments you make in your early working years can offset your lack of income once you leave the workforce and continue growing in value for your retirement.
Consider upskilling. Distance education allows stay-home parents to obtain new skills and qualifications, enhancing their future employability and earning potential.
Stay level-headed in a separation. I’ve seen many women forgo money and investments in favour of keeping the family home, only to realise down the track they can’t afford its upkeep on their own. Or they sign on the dotted line without advice. Remember too that super is part of the joint assets – you could claim part of your ex’s super in the settlement, offsetting your time away from paid work.
Finally, consider your approach to parenting. This is 2024: women don’t need to be the sole caregivers. Some couples now both go part-time, allowing them both to maintain a foot in the workforce (and continue earning income and super) while also enjoying time with their youngsters!
Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at www.onyourowntwofeet.com.au
Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754.
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