Shifting the dial on financial equality.
With International Women’s Day 2020 on the horizon, Senior Financial Adviser Nga Vu talks about life as a working mum, and what’s really needed to create a more financially equal world.
Nga sits at her desk with a huge, beaming smile and laughs when I ask her what on earth possessed her to get into financial services – a notoriously male-dominated profession with long hours and a gender wage gap that’s historically been highest in the country (currently an eye-watering 22.2%).
Nga just shrugs and says: “People. I got into financial advice because every day I get to help real people with really important financial decisions and teach them how to genuinely improve their lives.”
And for Nga, financial literacy and empowering good decision-making are at the crux of the struggle towards equality.
Whilst there’s certainly been progress for women across the developed world, the climb towards parity is unquestionably still uphill.
Women live longer, are paid less than men (on average 79 cents to the dollar, or $25,679 less per year in average total remuneration) and are more likely to take time out of the workforce to raise children and to care for sick and ageing relatives.
“Given these uniquely female challenges,” says Nga, “we’ve got to get our money working as hard as possible, as early as possible.”
So for International Women’s Day, Nga shares some suggestions for how each of us can help make this a more equal world, one financial discussion at a time.
Making the world more equal,
one financial discussion at a time.
Keep on saving.
Nga starts off by singing the praises of hard-working, hard-saving women.
Whilst industry research tells us that women are more likely to describe themselves as cautious with their money than men, the knock-on effect of this is that we’re also great savers. In fact, a recent study from Fidelity found that women are “twice as likely as men to have a ‘secret stash’ of cash” squirrelled away for an emergency.
“Having a cushion is a really important part of a well-rounded financial strategy,” Nga explains.
Have courage to invest.
Whilst having savings is very important, learning about the other things we can do with spare cash is equally so.
The trouble is, when you have less disposable income and savings, you’ve got more to lose and it’s easy to become conservative and cautious.
Enter: the ‘investment gap’ – another string on the financial inequality bow.
“It’s a vicious cycle,” says Nga, “women have less money to invest, so they invest less (or not at all) and then the gap widens.”
Add in lost super and the missed pay-bumps from time taken out of the workforce to care for family and a chasm emerges.
To help close this gap, Nga suggests teaching women early about not only saving, but also investing.
“You don’t need to be a millionaire to invest,” she says. “You do need a buffer to make sure you’re okay if things go wrong, and a good adviser can help you to understand and balance the potential risks and rewards.”
Fidelity’s recent state-of-the-nation report on the barriers to women investing found that about three quarters (75.5%) of women describe their approach to investing as ‘cautious’ or ‘tentative’, compared to less than 60% of men. We’re also twice as likely to describe our appetite for risk as ‘very low’ (33.8% of women vs 15.7% of men) and “around six in 10 of us equate investment risk to potential or guaranteed losses.”
“Investing does come with risk,” says Nga, “but also the greatest potential to grow your savings. Working with a good adviser will help you to understand – in plain language – what the risks really are, and what they mean in your particular circumstances.”
It’s a vicious cycle. Women have less money to invest, so they invest less (or not at all) and the gap widens further.
Nga Vu, Senior Financial Adviser on ‘The Investment Gap’
Understand the gap.
50 years after Australia’s landmark Equal Pay case of 1969, the gender pay gap still hovers around 14%.
While it’s hard to affect sweeping systemic change alone, we can each do our bit in our own lives.
Whether you choose to march at the next [Un]Equal Pay Day (Aug 28 last year, marking the 59 additional days women must work from the end of the last financial year to earn the same amount as men) or advocate for a raise for yourself or on behalf of a direct report, there are many ways we can help close the gap.
“Whatever you do,” says Nga, “back yourself with data, understand your worth in your market and amongst your peers. Then, don’t be afraid to advocate for it. A good financial adviser can coach you on how and when it’s best to do this for you, your family and your career.”
Own your super.
Super is a brilliant tool and even if retirement seems a long way off, there are still lots of simple things you can do to make sure you’re getting the most out of your money.
The fact is, if you’re earning $50,000 a year, your employer is sending nearly $5,000 of your money, somewhere.
“Getting a handle on your super, understanding where your money is going and what it’s doing is a really important first step,” says Nga.
Once you know that, you can begin to think about consolidating accounts, finding lost super, and considering additional contributions or an investment program.
If you’re looking to start a family and expect to take some time out of the workforce, getting advice early can arm you with strategies to minimise the impact of lost income and penalty on your super balance as well.
When we’re considering the ‘costs’ of childcare, they need to be spread out and weighed up against total family income – not just offset against the woman’s annual salary.
Nga is calling for an urgent shift on how we talk about the cost and benefits of life as a working parent.
Plan for family, as a family.
From an emotional perspective, the birth of her own daughter five years ago required “a huge adjustment,” says Nga.
From a financial perspective, she had a better footing than most, as motherhood loomed large.
“Being an adviser, I was able to understand what it would mean if I took 6 or 12 months off work – financially and in regards to my career progression,” says Nga, “but for most women planning for family can be a really stressful experience, particularly without good advice.”
The responsibilities of a working parent, choices around childcare and a primary carer’s return to work are also fraught.
“Watching others continue to climb in their careers whilst mine would need to be temporarily paused… sleep deprivation and accepting a new normal was part of my journey. I couldn’t do the same ‘stay back to meet deadlines’ in the way I used to as I had childcare pick ups to worry about. You do have to learn to adapt and change the way you operate to fit in all the important things.”
What would really empower women to return to work? Nga says: provide them with readily available, free (or incredibly low cost), hyper-local and high-quality childcare.
“Women are making decisions – especially when having subsequent children – that the cost of childcare outweighs the benefits of returning to work and that’s a sign that things are messed up,” she says. “The decision to return to work should not be simply a financial decision – it can be about role modelling to your children, building your career or just because you love it. But so often, it comes down to the dollars and cents.”
In response, Nga is calling for an urgent shift on how we talk about the cost and benefits of life as a working parent.
It’s easy to see that one benefit of a woman returning to work is a bump in family income. So when we’re considering the ‘costs’ of childcare, they need to be spread out and weighed up against total family income as well – not just offset against the woman’s annual salary alone.
“So often we see women saying: ‘it’s just not worth it for me to pay for childcare when my salary is only $50,000’ – but this kind of thinking puts the cost of childcare disproportionately on the person returning to work – most often, the woman.”
As remedy, it’s best to talk and think about childcare as a cost, and a benefit, that’s spread across the entire family unit.
This same logic can be applied to return to work plans and modifying work hours for new families. “When a child needs to be cared for,” say Nga, “we tell our clients to assume that both spouses can bear some of the caregiving. For example, my husband Frank and I have made a joint decision to work 9-day fortnights so every Friday, our daughter has one of us home.”
Of course, this all requires the approval of our employers – but we need to start these conversations by asking the questions.
Find a mentor. Be a mentor.
As we wrap up, Nga tells me there’s one more thing that’s made a huge impact on her life, as a woman and a self-professed ‘career-loving parent’: mentorship.
Even if there aren’t formal ‘mentors’ in your life, Nga stresses the importance of finding and connecting with other like-minded women in your network.
“Being able to kick ideas around, to build community and connection… It can definitely help you feel less isolated,” she says. “The challenges are easier to manage when shared. Most of the time, the problem is halved just by being able to discuss it.”
Admittedly, building and nurturing networks is another time-consuming responsibility for a busy working parent like Nga, but she says the guidance she’s been able to give and receive over the years has been more than worth it.
“When women stick together and focus on developing and promoting each other’s achievements, we chip away at inequality.”
And isn’t that what this year’s International Women’s Day theme is all about? Each for Equal.
If we all do our bit for ourselves and for one another, there’s really no other possibility: we’re bound to leave behind a world that’s just a little bit better, and a little bit more equal.
Contact us to speak Nga or one of our award-winning advisers.
To join the conversation and celebrate the achievements of brilliant women, follow #IWD2020 and #EachforEqual this International Women’s Day.