What are women in Aotearoa New Zealand concerned about when it comes to their finances? How do women’s views towards their finances differ from men’s? What are the barriers to financial wellbeing for women in the 2020s?
Thankfully, the Financial Services Council has done some significant research in this area specifically about women and their financial wellbeing as part of their 2021 Financial Services Council Money & You research series.
Key points of concern and financial trends for Kiwi women include:
- Regularly worrying about money – 60% of women worried about money daily, weekly or monthly. 70% of women felt that financial wellbeing had some or a significant influence on their overall wellbeing. When money worries or anxiety impact on our physical or mental wellbeing, it’s important to take steps to reduce this, by taking control of our finances, or becoming better informed.
- Not feeling prepared for retirement – 62% of women don’t feel prepared for retirement. Saving for retirement can be harder for women than for men, as often their working life is interrupted with caregiver commitments for having and raising children, or looking after elderly parents. Only 38% of women feel very or reasonably prepared for retirement (compared to over 50% of men).
- Money worries tend to reduce with age – women who are 60 years or older worry the least about their finances, whereas younger women worry the most. This makes sense with general financial anxiety amongst younger people worried about being able to afford buying a house, the cost of living, repaying student loans and so on.
- Low levels of financial wellbeing – over 80% of women rated their financial wellbeing as moderate, low or very low.
- Low investing literacy – 60% of women considered their knowledge of investing to be low and to have limited or no experience of investing. This compares to 40% of men.
- Increasing use of digital financial tools – 32% of women use or plan to use micro-investing platforms (such as Sharesies and Hatch). Other forms of digital tools include robo-advice, or in the lending space, online loan calculators and online personal loan applications.
Financial anxiety for women is not localised to Aotearoa New Zealand. Globally, women are impacted with lower earning potential compared to their male counterparts, due to the gender pay gap. The gender pay gap is attributed to:
- Women performing lower paid, less skilled work,
- Gender pay disparity for the same role,
- Fewer women in decision making roles,
- Women perform more unpaid work than men which impacts on their ability to do more paid work.
When it comes to retirement planning, women approach their retirement differently to men:
- Aotearoa New Zealand’s gender pay gap is 9% – women are paid 9% less than men on average,
- Women contribute less to their Kiwisaver accounts,
- Women prefer to save their money rather than invest it for higher returns.
It’s clear that financial confidence is a key factor in reducing the financial gap between men and women.
Boosting your financial confidence
Do you manage and control your household budget? Do you understand all the household income you have coming in each month, and do you have oversight of all your outgoings?
If you are in charge of the family finances, do you have a budget in place so you can assess your financial position on a regular basis? Do you have leftover money to invest or add to your household emergency fund? Do you need to consolidate multiple debts for easier financial control?
If you are not in charge of the family finances, find out how you can get more involved, and support your partner to manage day to day expenses and your financial future. Having regular household finance meetings is a great way to gain more financial knowledge, ask questions and suggest different ways of managing your joint finances. What if something was to happen to your partner? It’s important to understand your income, expenses, investments and how to access various accounts and if the worst was to happen.
Once you’re clear on your budget, the next step is to set your financial goals. These could be short term goals, such as upgrading the BBQ this summer, medium term goals such as saving up for that international family holiday, or long term goals such as investing to add extra funds to your Kiwisaver account for your retirement.
The five principles of financial literacy
- Earn – maximising your earnings is important at any stage of your career.
- Salary aside, are you making the most of the company benefits your company provides? Whether that’s making the most of free office fruit & coffee and making some savings on your grocery budget each weekday, or opting in to employee share schemes or healthcare benefits.
- Salary increases are also important to ensure that you are maximising your earning potential. At your next end of year review, go in prepared with the projects you’ve aced, the value you’ve added to the business and your salary expectations. Many businesses are increasing salaries in line with inflation and to support the rising cost of living so here is another opportunity to have a conversation about increasing your pay packet.
- Juggling parental leave with your partner – taking important time with your newest family member is crucial, so make sure you’re across government parental leave entitlements, your company’s parental leave policies and your partner’s parental leave policies so you can make the most of your time off while minimising the impact on your income.
- Save and invest – saving for future goals, big and small, is important and a great habit to get into early.
- Regular savings – do you save up for large items, or are you guilty of buying things on your credit card or using Buy Now Pay Later? Saving up for items and purchasing when you can afford them is ideal, as is planning ahead for milestone projects like international trips or house deposits. Monitor your interest rates though, as it might make sense to channel longer term savings into investments instead.
- Investing – using micro-investing platforms such as Sharesies or Hatch are great ways to break into the sharemarket and diversify your hard earned savings. Investing is generally for longer term financial goals, such as house deposits, and retirement as sharemarket returns can fluctuate and may take some time to see a return. You can also ‘set-and-forget’ your investments by choosing index funds or managed funds – just check the fees on these to ensure you’re getting the best value from your investment strategy.
- Kiwisaver contributions – your Kiwisaver should not be a set and forget product. Fund providers typically recommend younger people set their Kiwisaver funds to high risk and high growth investments early on to grow their savings quickly, but people close to their retirement switch to more conservative funds as they get closer to needing to ‘cash up’.
- Protect – care for yourself and your family in case of unexpected emergencies.
- Insurance – do you have all the insurances you need in place? Are your insurance policies up to date and fit for purpose? For example, is your home’s Sum Insured increasing in line with current rebuild costs? If your partner is the sole income earner, do you have a life insurance policy to cover you in the event something was to happen to them?
- Emergency Fund – sometimes we need money fast, for an unexpected expense or an unexpected situation. Do you have a savings account you regularly add to, that you can dip into if you need to, without resorting to using your credit card? Could it cover your household expenses if you could not work unexpectedly for a month?
- Spend – do you make sure you’re getting good value on your purchases?
- Fixed expenses – monthly bills such as power, phone and entertainment subscriptions all add up. Cancel any subscriptions you’re not using and do your research to ensure you’re getting the best deal from your utility companies.
- Variable expenses – buying second hand, shopping for specials and buying in bulk are all helpful ways to save money on your grocery bill, clothing purchases and other monthly expenses.
- Childcare costs – are you up to date with recent government changes affecting childcare costs? Make sure you make the most of your entitlements.
- Budget check in – can you afford it this month? Holding off on non-urgent expenses until the following month can help you manage your household cash flow.
- Borrow – taking on debt for essential purchases can help you make money over time.
- Debt for positive outcomes – taking on a mortgage to purchase your own home, a personal loan for a course to get you ahead in your career or a car loan so that you can get to work are all positive forms of debt. You need to ensure that you have the ability to repay it though.
Personal finance advice
If you’re struggling with making a budget or setting financial goals, there are free money management services available (https://www.moneytalks.co.nz/) and personal finance advisers (paid services).
How much can you borrow with a personal loan?
With Nectar you can borrow unsecured up to $30,000, or as little as $2,000. Use our loan repayment calculator to find out how much you could get. We offer debt consolidation loans to simplify multiple debt repayments, and emergency or urgent loans to meet your cash flow needs.
Getting started with Nectar
Do you need a great rate on a personal loan? We’d love to help with your personal loan requirements. Find out how much you could borrow and learn more about our personal loans. You can get started with Nectar and get a personalised loan quote online which will include your interest rate, maximum borrowing amount and repayment options. Borrow better, faster today!*
*Nectar’s lending criteria and responsible lending checks apply.