Join the Club – Financial wellbeing for Women

Rebecca Thomas, Chief Executive Officer, Mint Asset Management

A report on Financial Wellbeing of Women, released in December 2021 by the Financial Services Council (FSC), revealed that perceived confidence, preparation and investment literacy among Women when it comes to their finances is low. Despite the fact that research shows that Women are engaged with budgeting, saving and investing. The key findings of the report were that over 80% of women rate their financial wellbeing moderate, low or very low and 60% rate their investing literacy low. Further, 62% of women don’t feel prepared for retirement and 60% of women worry about money daily, weekly or monthly. According to the FSC, both global and domestic research has highlighted some common challenges facing women: they have lower confidence and financial wellbeing compared to men, they have lower incomes due to pay inequalities, and are impacted by loss of income through life stages where they are the primary carer. So what’s the solution? Whilst it’s going to take time to overcome the social constraints, there are some things we can do today to help offset these drawbacks and raise our game.

After a brief flirtation with being a Barrister, I switched careers in the mid to late 1980’s into financial services and ultimately into funds management. My passion has always been advocating for the benefits of saving and investing. More specifically though, I want women, to benefit from the financial independence, freedom of choice and feeling of security that having a savings buffer gives you.

The NZ retirement structure with NZ Super and KiwiSaver, is a very good platform for dealing with retirement savings. It is straightforward and free of tax complexity, however it doesn’t deal with the particular hurdles that women face in terms of lost earning years through childcare, family support, living longer than men, or the gender pay gap, which all manifest themselves in the form of a smaller pot of savings to support a comfortable retirement.

The financial services industry has an obligation to encourage women to engage with this seemingly dry topic and spend some time thinking ahead about how to optimise and/or supplement the spending power created by investing early and regularly. Several strategies can help mitigate the impact of the “lost years” but the worst thing you can do is to put this off. Time is your greatest asset in terms of the number of years you save, followed by saving more when you can afford to put some extra money away.

How can we help change attitudes and behaviour in relation to this? Get rid of jargon. There is nothing more exclusionary than the use of specialist terminology. This puts us off from engaging with a topic that needs a glossary to interpret and creates unnecessary barriers to education. We need to use plain and simple language which explains the risks and benefits of any investment strategy. Women experience enough life time examples of not “feeling part of the club” so education on investment needs to be feel like a safe environment where we can learn and ask questions.

Like the wider population there will be preferences for learning and engaging through digital tools or through a trusted advisor. The Sorted website is a good place to start in terms of education and strategies for KiwiSaver and other forms of non-locked in investing as well as resources from the
Financial Markets Authority. These are sources of unbiased advice from government organisations. If you want to engage an adviser to do the heavy lifting for you can get a list of these on the Financial Advice NZ website. There are fewer women in this profession than there should be but you can find some here.

Whichever way you go, adopt the strategy of “never trusting a skinny chef” and ask a professional investor what they do themselves. For my part, I started my investment journey at 22. I had my share of successes and failures - and learned a lot on the way. But I started early and have kept going through good times and bad. The way I think about my savings is short term, medium term and long term buckets. The riskier investments go into the long term bucket. They will have a disproportionate share of ups and downs but you won’t worry so much about these if you are not planning to access these funds in the near term and time should be on your side if you leave these investments alone. Conversely, the medium and short term buckets should be lower and medium risk, the savings should be more liquid so you can raid these buckets and turn them into cash if a rainy day arrives.

Now is the time to take some simple steps towards building your confidence, investment literacy and independent financial future.

Step 1 - Use these resources to assess your financial situation and set some goals. Figure out how much you need to save to live comfortably in retirement, consider your other incomes streams, your assets, and your debts – will these be paid off by the time you retire?

Step 2- Ask yourself whether the current KiwiSaver fund you’re in fits with your financial goals. There’s some tips and calculators here to help with this.

Step 3- If you’re in a position to invest outside of KiwiSaver start your research here. If you need some extra support, find a financial advisor that suits you, listens to you, understands your goals and has a good track record. Shop around, like a good handbag, you don’t want to compromise on quality and if they’re a good fit, you’ll keep them for life.

Disclaimer: Rebecca Thomas is the Chief Executive Officer at Mint Asset Management Limited. The above article is intended to provide information and does not purport to give investment advice.

Mint Asset Management is the issuer of the Mint Asset Management Funds. Download a copy of the product disclosure statement here.