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Opinion by Diana Clement
Diana Clement is a freelance journalist who has written a column for the Herald since 2004. Before that, she was personal finance editor for the Sunday Business (now The Business) newspaper in London.
Even in the 2020s, there is no doubt that there is a gendered financial crisis.Of course, there are men and people of other genders who struggle financially. But on average women are worse off.
Women earn less on average, save less and take longer career breaks. Some may simply have less in the pot for retirement. Others are deeply mired in debt, sometimes after a breakup.
If January got you down, have a fresh start in February, said Money Sweetspot’s chief executive Sasha Lockley. “We all have the best of intentions with resolutions in January, and they’ve kind of gone by the end of January. We think February is the new, New Year. In February all your bills [from Christmas] have landed and you’ve realised actually how much Christmas has cost you,” she said.
For those women who are facing a debt mountain and don’t know where to start, just do something, said Lockley. “The best time to start is now [but] it doesn’t need to all be solved immediately.” Share the problem with a friend if you can’t get an appointment with a money mentor at this time of year.
“Focus on baby steps. It could be the tiniest thing each day. It could be finding the courage to look at your bank balance.”
Women are often more impacted financially by life events such as divorce and business failures. Photo / 123RF
Trickier, but worthwhile is logging into your Buy Now Pay Later apps and trying to work out how much you owe. The apps are designed to show how much you can spend, not how much you owe, she said.
Accept that money isn’t rational and humans are imperfect, Lockley said. You are not alone.
Over and above debt, there are many other salient differences that show up in the financial gender gap. According to Te Ara Ahunga Ora Retirement Commission, 22% of women with KiwiSaver accounts don’t contribute, compared to 16% of men. Men have significantly higher balances on average. For example, 26% of men surveyed in 2021 believed they had over $50,000 in KiwiSaver compared to only 14% of women. There are also gender gaps in using and understanding financial products and in resilience for the future.
The Retirement Commissioner Jane Wrightson said it’s important for everyone to be on top of their finances. “It’s not entirely gendered,” Wrightson said. “It’s especially important for women because we are generally behind our male counterparts through the jobs and careers we choose. Then there is the time out of the workforce [for parenting or caregiving].”
She added that women are often more impacted financially by life events such as divorce and business failures. Women who have worked in family businesses, for example, may have a lower earning capability than their partner or ex. “If a couple’s business fails, it’s often seen as his business,” said Wrightson. “But she is often just as badly affected if not more.”
Steps individuals can take include:
Find out about your finances. Read the statements. Understand what funds you’re invested in. Find out when the insurance renewal is due, how much it covers you for and what the premiums are. Have open conversations, said Wrightson. Especially if one partner earns more than the other. Sometimes money is secreted away in those situations.
Take the plunge and set up a budget. It can be as simple as a piece of paper noting your income and the breakdown of how that is spent. If you can use a spreadsheet or budgeting software that will help a lot.
Review your KiwiSaver fund. Find out what fund you’re in, if it’s appropriate for your circumstances and what your final balance is projected to be. Your provider’s website or Sorted.org.nz can help.
Work on your knowledge of money management, financial products, and risk. Yes, you can learn this online, but be wary of influencers with something to sell. Good personal finance books aimed at women abound and provide impartial information.
Get professional advice. Depending on your situation that could be a money mentor, financial adviser or if your problems are more deep-seated, then a counsellor, psychotherapist or other therapist.
Finally, said Wrightson, have a conversation with your daughters and make sure they are not making the same mistakes as their mothers.
