What Barriers Do Young Australian Women Face in Reaching Financial Independence?
Today, we have a guest post from Jill of stilljill.com. Jill is an Australian blogger sharing lessons of personal growth in finances, relationships, spirituality, health, fitness, career & everything in between.
This post contains affiliate links. See Disclosures for details.
This website recently featured a post on 5 Reasons Why Young Women Need to Think About Financial Independence Differently. The issues canvassed in that post should be familiar to women not just in the United States, but all over the world.
Australia is popularly known as “the lucky country.” It holds the OECD record for economic growth at 26 years and counting. While there are some definite advantages of living in Australia over the United States in terms of reaching financial independence (like free universal health care) there are still many reasons why Australian women need to think about financial independence differently than their male compatriots.
Australia, like the United States and many other countries around the world, has made significant progress towards gender equality in recent decades. Women can now exercise fundamental equal rights like the right to vote, obtain a divorce, and – theoretically – earn the same pay for the same work as men. However, Australian women are still disadvantaged by complex systems of institutionalised discrimination which place invisible barriers in the way of their financial independence.
Here are some fast facts :
- Women do not earn the same as men
- Women's retirement nest eggs are falling behind men’s by about 40 per cent
- Nine out of 10 Australian women don’t have enough super to fund their retirements
- Women are more likely than men to take a break from work to raise children
- Women are 2.5 times more likely to live in poverty in retirement
- Women have a longer life expectancy than men
With the results so rigged against them, what should young Australian women be aware of in the race to financial independence?
The Pink Tax
Like our sisters in the northern hemisphere, the women of Australia are well-educated in how to spend money but generally aren’t brought up to understand how money works, how it can be used to buy us time, and how it doesn't have to be spent.
Because of this, Australian women have become targets for what’s known as the ‘pink tax’. This is not really a tax, but refers to the phenomenon of identical or similar products costing more when they are marketed to women. You can see for yourself at this Tumblr which encourages people to photograph and submit examples of products subject to a pink tax. While a couple of dollars here and there might not seem like that big of a deal, when women are on average already earning less than men, the difference really starts to add up.
When the Australian Government introduced a 10 per cent goods and sales tax (GST) in the year 2000, tampons and pads were classified as luxury items, unlike condoms, lubricant, sunscreen for example which were considered necessities. Eighteen years on and women are still paying a 10 per cent tax for their ‘luxury’ tampons.
Financial Literacy and Women
It didn’t seem unusual to me as a child that my grandmothers never worked or even drove a car. While my mother worked full-time, and was probably the savvier of my two parents, she always just let my father handle the family’s finances. It was in this context that I grew appreciating what level of financial literacy was expected of a woman.
The Australian Securities and Investments Commission (ASIC) has developed an online women’s money toolkit in recognition of the fact that 55 per cent of Australian women under 35 find dealing with money stressful and overwhelming, 85 per cent of women under 35 don’t understand fundamental investment concepts, and 77 per cent of women under 35 don’t know the value of their superannuation.
But the problem can’t just be a lack of financial literacy in women, can it? What about when women require time out of the work force to have a child?
On The Issue of Maternity Leave
There is a staggering difference between an Australian and American woman’s entitlements to paid parental leave. While women in the United States have zero entitlement, in Australia the minimum entitlement is currently up to 18 weeks at the national minimum wage of $695 per week before tax. This is funded by the government. In addition, women are often entitled to additional amounts of maternity leave paid by their employer under their individual award or agreement.
Australian women are definitely relatively better off when it comes to their maternity leave entitlements. But that doesn’t mean that they aren’t financially disadvantaged further down the track in the same ways in which American women are.
Several years ago now, I finished university and entered my chosen profession. I landed a great job at a well-respected firm. After a few days, this aspiring young woman realised that only two of the firm’s twelve partners were female. One had never had children. The other worked in what was traditionally seen as a ‘female-friendly’ part of the business. In the coming months it became clear to me that when women took time out of their career to raise families, their male peers kept advancing in their absence. When they returned, it became almost impossible to catch up. I Googled my old firm as I was writing this post. The partnership ratio is still ten men to two women.
Respected Australian political journalist and commentator, Annabel Crabb, has written an excellent book entitled The Wife Drought. The premise of the book is that gender inequality in Australian politics and business is due to the fact that men are able to rely upon their wives. The role of women in the workforce has changed but their role in the home has not. Women are fitting their working lives around things like child care, elder care, and general household duties. This puts men with wives at a significant advantage in being able to continue to progress uninterrupted throughout their careers.
What About Superannuation?
The other major detriment to Australian women in taking time out to raise a family is regarding their superannuation (‘super’). In Australia, retirement is funded through a mix of personal savings, government pension, and super. Super is made up of employer contributions and personal contributions which are deposited into a super fund and invested by the fund’s trustee. Upon retirement, super can be accessed, usually as a pension.
Twenty-five years after its introduction, a major study has found that Australia’s superannuation system is failing in its primary goal of providing universal benefits and is systematically biased against women. At age 25, women have roughly similar superannuation balances to men. By 35 to 44 their balances are 30 per cent lower, and by ages 45 to 64 they are 45 per cent lower.
So, what is to be done? How are young women to achieve financial independence despite all of this?
Until society catches up and dismantles these invisible barriers to women’s financial independence, I would agree that the best advice for Australia’s young women is the same as that for young women in the United States. Save money today so that you are able to buy yourself time in the future.
Sisters For FI Note: We believe it's important to start educating young women about financial independence around the world. Despite women taking on more roles in the workplace, financial education continues to lag and risks the future of women. Submit your perspective and thoughts and how we can inform and educate women from different backgrounds on what financial independence means and how to get started early.