Cash advice for your life stage

It’s not surprising that our attitudes towards money change over time,  as do our needs. Meet three women who openly discuss what money means to them at their current stage of life. By Emily Chantiri.

In your 30s

For many women in their thirties past spending habits may have taken their toll; now is a good time to review and assess the future. Career-wise, women are at their strongest. This is a period of income growth, so make the most of it.

For Shelley, there are a few areas of concern. Having started her own business and relying on it to produce an income, a regular saving plan is a necessity. With any new business there may be times when the income stream is low. As Shelly admits, she has had trouble with saving, so a good option is to set up a regular saving plan where money is automatically deducted from her pay. Most banks offer online accounts bearing higher interest rates than regular saving accounts. You can expect to find online accounts offering from about 5 to 6.5 per cent per annum compared to 0.25 per cent interest for regular saving accounts.

Many young women fall prey to credit card debt. Previously a victim herself, Shelley has made paying off her credit card a priority. There is plenty of competition in the credit card market; switch cards if you are paying more than 14 per cent interest. A number of institutions offer ‘honeymoon’ rates for the first six months, then switch to a higher interest rate after that period. You can save several hundred dollars each year just by transferring to a lower interest rate card. There is no point starting a savings plan if you are carrying debt. The interest you are charged on your credit card purchases is likely to outweigh any coming in from a savings plan.

Money in your thirties

Shelley Millingen, 32, designer and owner of Bellicious Jewellery

At 32, Shelley Millingen is a self-employed businesswoman with a keen eye to the future. But things were very different 10 years ago, when she was earning about $500 a week as a travel consultant in London, and living very much in the moment.

“I never saved for anything, except a few overseas trips. It was very much a case of money coming in, money going out. Before I came back to Australia, my parents were saying, ‘You should be saving so you have something to come back to’. But I just thought, ‘What for?’,” says Shelley.

Perhaps unsurprisingly then, she struggled to make ends met after arriving back home in October 2002, despite undertaking a number of odd jobs and going on the dole. “I was getting desperate about not knowing if I could pay the rent as the dole wasn’t much money. Plus, I was carrying a lot of credit card debt – about $4,000 or $5,000,” recalls Shelley.

But since establishing her own company, Bellicious Jewellery (www.bellicious.com), Shelley’s attitude towards money has changed dramatically. She now sells her own range of custom-made beaded jewellery at Bondi and Wollongong markets in New South Wales, and organises jewellery parties where guests can view and buy the range or even create their own pieces. “I think it wasn’t until I started my own business and started earning that I realised I had to take control of my spending. Now I pay my credit card off every month. Up till then I always had this romantic dream of marrying somebody who would already be well established. It’s really satisfying to be in control of your own finances.”

Shelley now rents a small studio and owns a car, but as yet does not own any property. She believes her quality of lifestyle is still very important, and she’s not ready to start paying off a mortgage.

“At the moment I’m not thinking about property investment. As the bank balance grows, I will start to consider it. I would like to invest my money somewhere, and property is a good option. I do have super from previous jobs, and I’ve hired a financial adviser, which also felt like a very mature, adult thing to do,” says Shelley.

Shelley’s adviser is helping her track down some lost superannuation monies due to the number of job changes she has had through the years. She has also started to put money away each week into a high interest earning account. “Now,” Shelley says, “I feel very powerful as an up-and-coming businesswoman who is managing her own money.”

In your 40s

The biggest challenge for Tania and Colin is that they do not have enough superannuation. They are well short of their target one million, which would produce $60,000 per annum income (see Super growth, page 109). Before deciding to focus on her degree, Tania worked part-time so she could be at home for the boys and also “keep her hand in the workforce”. It also provided an opportunity to add more to their super fund. This is an ideal time to take advantage of the government’s Super Co-contribution plan for those earning less than $58,000. For every dollar you contribute to your superannuation fund, the Australian government will add up to $1.50. For more information, visit the Association of Superannuation Funds of Australia at www.asfa.asn.au. If Tania and Colin do not reach their target of one million, they believe their substantial share option portfolio will also help them produce income when they retire.

Tania has found a family budget works best when it comes to tracking her family’s financial commitments and expenses. There are a number of free budget planners available online, for example from the Australian Securities & Investments Commission at www.asic.gov.au. Alternatively, use the budget planner located at the back of each issue of Notebook: to keep track of your monthly spending.

Money in your forties

Tania Rice-Brading, 44, university student and mother of two

The biggest change Tania Rice-Brading has found in her forties is immediacy of the moment. “Meeting financial milestones suddenly takes on a new meaning. Biologically you’re halfway through life, and find you don’t have the luxury of thinking, ‘I must get round to this in ten years’ time’. It’s here and now,” says Tania.

Tania and her husband Colin, a senior executive in IT, have recently sold an investment property in Canberra and are adding to their property portfolio. At the moment, the couple and their sons, Mitchell, 10, and Cooper, nine, are living in one of their properties in Glebe, Sydney, while it is being renovated.

Tania and Colin have a monthly budget that covers everything to the cent. They also believe in diversifying their investments, and have a small share portfolio valued at $10,000, and a large share options portfolio managed by their broker. “We research the company and go through a long process before we make any financial decision,” says Tania.

Like many women who take time out to raise children, Tania’s superannuation ($100,000) is not enough, even though she regularly tops it up with voluntary contributions. Colin has $250,000, but their combined super falls short of the one million they believe they’ll need for a comfortable retirement.

Before the children were born, Tania worked in middle management for Qantas, and now the kids are in school, she hopes to return to full-time work. Tania is re-educating herself to help her future earning capacity, and is currently completing a degree in communications and journalism. “My husband views it as his retirement fund,” she jokes.

In your 50s

One of the biggest challenges for women in their fifties will be to build enough income-producing investments before retirement.

Kaye is keen to learn about investing in the share market and has started a share portfolio. As her confidence grows she will buy more shares and re-invest all the dividends. Kaye will discover the benefit in owning shares is ready access to her money when she needs it. While property is a good investment, it is not as easy to sell if money is needed in a hurry.

Ill health is one of the main concerns for women in their fifties, along with redundancies as younger people enter the job market. To protect yourself in case this happens, it’s useful to have enough savings for three months’ worth of living expenses, to see you through between jobs.

Income-protection insurance is a wise choice, and policies are generally offered by life and health insurance companies. You can expect the policy to provide you with an ongoing income – up to 75 per cent of your salary. It’s important to define your income producing duties, to make sure that you are being covered for the work you perform. Also remember that income-protection payments are tax deductible.

Money in your fifties

Kaye Cox, 55, executive director in business development

Kaye Cox’s attitude to money was shaped by her childhood. As a teenager, she and
her four siblings had to grow up quickly when her family met financial hardship and lost everything .

“We’d lie in bed at night and think about how we could save money to help my mother, because she became the main breadwinner. Even things like using salt for toothpaste and filling the bath were an issue, and at one time the water was  cut off. My parents were under a lot of financial pressure, but thankfully, we were basically happy,” says Kaye. After several years, the family found themselves back on their feet, but, says Kaye, “I didn’t want to find myself in that situation ever again.”

Today, the mother of two is a successful businesswoman earning a six-figure salary. But seven years ago things weren’t so rosy, when Kaye’s husband of 30 years left to be with someone else.“I had to look at what I was earning and my capacity to earn in twelve months’ time – I’d decided to buy my husband’s share of the house and rent it out. My family thought I was crazy. I borrowed money to buy the house, and had a great solicitor who encouraged me.”

Looking back, Kaye is very happy with that decision – the house has doubled in value to $1.6 million. With that equity, she bought a home in Melbourne worth about $600,000 and is paying off a mortgage. “If I had listened to my accountant and friends who said to get rid of all the baggage and sell everything, I would have walked away with just a little over half of the value of the house at the time,” she says. “It is reassuring to know I have a property I could sell if I need to.”

Her main concern now is superannuation. With only $150,000, she is falling short of having enough for retirement, so she has started buying shares and would like her portfolio to grow. For added security, Kaye has income-protection insurance.

Kaye’s personal experiences have led her to believe women need to be self-sufficient to manage change in their lives. “I’ve learned money is about independence; it’s about being in control of your own security, what you are capable of and what you can afford,” she says.

 

Words: Emily Chantiri. Photography: Andrew Lehmann. Hair & make-up: Yolanda Lukowski.