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Secret bank accounts, financial confidence
18 March 2019
2000 men and women, evenly split between the sexes, have been interviewed for Westpac about how they manage their household expenses. The survey unearths some expected and unexpected findings.
1300 interviewees identified as being a couple and 700 as being single.
Following wider trends in research around men and women’s confidence with their finances and with financial concepts, one of the expected results in the survey - and one that remains worrying when it comes to women’s financial health and well-being - is that men are “more likely to feel financially educated compared with women”.
Looking at the cohort overall and where they credit their education as coming from, 57 percent said they learned money management from their older generations, while 42 percent said they were self-taught.
Eleven percent felt “uneducated about money”. (This year’s Global Money Week under the theme Learn Earn Save is on from March 25 and has some great tips for young people and for you about finance.)
Interestingly, 40 percent of women in the Westpac survey revealed they were self-taught when it came to managing their money. The survey also found that 60 percent of women say they live week to week as against 40 percent of men. Considering this scenario, financial literacy education with wider availability and greater diversity, particularly for women if they are to increase their overall long-term financial well-being by increasing their ability to plan and save, would not go astray.
Respondents in couples compared with single people said they struggled to afford discretionary spending, but they were better about having a savings buffer and were also less worried about affording a property.
An unexpected finding was that 90 percent of men and women don’t consult with their partner or ask permission before they spend. In itself, and when you see that 60 percent of respondents have a separate bank account from their partner, this is not a negative issue. However, it does speak to the fact that people are not discussing money management issues with one another – at least not around spending.
(Ten percent of respondents also admitted to having a bank account that was a secret.)
Westpac Women’s Markets Felicity Duffy points out: “Being more honest and open around money can support you to think about your spending and saving habits as well as reveal how you both relate to money, which can be very important in any relationship, especially if it is a point of friction. Agreeing on an amount both of you are happy to splurge or save every week can help you both budget.”
At the recent All About Women event at the Sydney Opera House, three women, including BT’s Melinda Howes, spoke on the topic “Bad With Money”.
A quick summary of the session: it’s important to remember that women are not bad with money but, in comparison to men, come from behind the ‘eight ball’ when it comes to financial opportunities. The ‘eight ball’ – or the reduction of women’s finances from the outset of their working lives - includes obstacles such as labour market forces (women are often in lower paying professions and often work part time, etc.); gender equity issues and the gender pay gap (for example, industry association Women In Super says, “female graduates earn $5000 less than male graduates in the same role”). Add to the eight ball the fact that the majority of women take time out of the workforce for caring duties (women spend on average five hours more per day caring for children than men); that flexible work practices in business pay lip service to the idea only, and there is straight forward discrimination, and you have to admit it’s not that we’re bad with money but that society is bad at providing women with the same opportunities as men to make money in the first place.
Reducing women’s financial opportunities over their lifetime is why women currently retire with 47 percent less superannuation than men and, according to Women In Super, receive one third of the government tax concessions on super (men receive the other two thirds).
Research from KANTAR Australia (mid-2018) revealed that 38 percent of the women sampled were “too worried about everyday finances to spend much time thinking about the future” (versus 28 percent of the men).
If you feel you don’t have the time to engage with your finances, let alone future proof your financial position, your financial skills will be eroded and your confidence will fall.
The upshot: we need to focus on and find ways to fix the inequity and discrimination, especially around financial remuneration. If we don’t, we will pay the price in the future as more women fall below the poverty line in old age.
According to Women in Super, 40 percent of older single retired women live in poverty and experience economic insecurity in retirement.
Governments and tax payers meet this inequity now and will continue to unless women achieve parity and access to jobs. In lieu of this happening, and the pay gap in Australia shows no evidence of closing quickly, women need to take financial control and improve outcomes for themselves. There are some simple ways to do this.
Master your own budget.
A budget tracks how much money you expect to earn, versus what you’re spending it on.
The information this provides on the essentials your income needs to cover and what’s left over to spend on yourself is important. More importantly, it highlights what you can save – helping women to ‘up’ their savings buffer.
Be savvy with your savings.
Once you’ve mastered a budget and realised what money you have left after essential costs are covered, start planning towards your savings goals.
Whether it’s for a new car, your next family holiday, a home deposit, or to top up your super, once you know what you’re saving for, set a target and a deadline to keep you motivated.
Take control and make your money go further by doing a little research into savings accounts and options available, and compare fees and interest rates.
Engage with your super. Look at funds and what they return and choose a fund that performs. Think about contributing more than the set amount. Super is compound interest and grows the longer it’s in service.
Learn before you loan.
According to our research, women are regularly using buy now pay later schemes. To avoid fees the “pay after” aspect of this needs to be factored into your budget. The terms and conditions are really important to understand.
If you don’t have enough savings and you need to borrow or use your credit card, understand the loan agreement’s requirements and map out how you’ll repay the loan, credit card, over time.