Fran Hughes: Huge leaps to secure women’s independent financial wellbeing but there’s still more to do

On International Women’s Day this Wednesday we are encouraged to embrace equity. The meaning of equity, as defined by the Oxford Dictionary, is the quality of being fair and impartial. So how do we separate equity from equality? Equality suggests that everyone is at a particular starting point and should be treated the same. Equity, by way of contrast, aims to give everyone what they need to be successful. How does this translate to the context of women, finance and money? Here are five possible ways to gain equity within financial outcomes. Equity within the workplace If there’s one thing that lockdowns have taught us, it’s that women can be just as effective working from home as they are in the office. Women have traditionally been forced to work in a part-time capacity as they raise a family. However, with a hybrid working environment comes better opportunities, according to a report by PWC. Paid parental leave also allows both parents to share up to 20 weeks of financial support when they take time off from work to care for a newborn or adopted child. This research suggests that women are gaining equity within the workplace, in career opportunities, remuneration and shared parenting roles. The power of knowledge Between 2000 and 2021, the number of women in Australia who hold a bachelor degree or higher almost doubled to 50 per cent. The Australian Bureau of Statistics reports that the proportion of female-owned or managed business in Australia grew from 31 per cent to 35 per cent over the past year. The proportion of women in managerial occupations grew from around 18 per cent in 1966 to 40 per cent in 2021, with 56 per cent in professional occupations. The increasing share of women in professional occupations is reflected by increasing education attainment. So whether it’s how to grow your business, leadership skills or technical skills, knowledge is power — power to gain equity in pay and financial security. Cash is queen To a woman, building a savings account for her own personal gain may not be high on the priority list. Rather, funding her children’s or loved ones needs might. According to a study by Fidelity on Women and Wealth, one third of women do not have a savings account and only a quarter own an investment portfolio. More than 50 per cent are interested in taking control and doing more to manage their finances. Funding the needs of others should not be at the sacrifice of a woman’s own financial wellbeing. Building a slush fund should be a key focus in prioritising her own financial independence. Equity within investing Back in the 1960s women did not hold an investment portfolio, let alone a bank account, without first gaining permission from their husbands. Today, 71 per cent of women aged 25 to 40 invest outside of superannuation. The research by Fidelity Investments found that women were investing their extra savings in direct shares, managed funds and exchange-traded funds. One of the easiest and cost-effective way to build equity within a share portfolio is through online trading platforms. Retirement savings The Association of Superannuation Funds of Australia is calling on the Federal Government to support a commitment to increase equity in super for women by 2030. It has suggested two measures — a superannuation guarantee on paid parental leave and a super baby bonus of $5000 for each child a woman gives birth to or adopts. It says these steps will help to close the retirement savings gap, with women currently retiring on average with 23 per cent less super than men due to time out of the workforce. Two strategies that are not often talked about but have been proven to gain equity are super spouse splitting and spouse super contributions. The first works by asking the super fund to transfer 85 per cent of the higher income-earning spouse’s super concessional contributions to the lower spouse’s super. The second is by contributing up to $3000 from the higher income-earning spouse to the lower income spouse’s superannuation. These strategies are effective ways to build equity in a couple’s retirement savings and equalise superannuation balances. Fran Hughes is a Certified Financial Planner and Head of Financial Solutions at Nexia Perth www.nexia.com.au