The most important way women can empower themselves is by being financially independent

GUEST OBSERVATION

As little girls growing up, we have all seen the Disney animated fairy tales where the prince rescues the commoner and falls in love, or the Hollywood movie ‘happy ever after’ endings.

As women, we have been conditioned from a very young age by the media, the entertainment industry and even our families to assume we will meet our dream man (or woman), settle down and maybe even have children.  And of course, we will live happily ever after…

While there is always the chance of that coming to fruition, what they don’t tell you is how it can turn to muck very quickly and what the consequences of this can be if it happens!

For those of us who have been around the block a couple of times, we have all seen, heard of, or experienced the effects of a marriage or de facto coupling and an ensuing separation or divorce. For those who haven’t experienced it, you may well have grown up in a single parent family yourself and witnessed the emotional and financial devastation that can be wreaked upon a family when this happens.

Did you know, 40 years after equal pay, women still earn on average 21% less than men? Which means they have less income to meet their everyday expenses - and less to contribute to their superannuation.

And that’s before we factor in the need for many of us to leave workforce to have children. Taking time out from our careers to raise kids results in less contributions to our super and study after study shows that once women return to work they find less opportunities for career advancement.

What this all adds up to is that women, by definition, have a harder time achieving their financial independence.

That can leave women socially and economically vulnerable to the three deadly financial Ds if they are reliant on their partners: divorce, death and desertion.

If these strike, a woman approaching middle age can find herself without her financial independence or worse facing retirement with what some have coined ‘Middle class homelessness’; facing old age with precious little income and the indignity of having to share accommodation.

At the end of the day, the most important way women can empower themselves is by being financially independent. This allows a woman to have choices - be it to leave an abusive or controlling relationship or simply take time out between jobs if so desired.

As a child in the 1970s, I got to live first hand with all of the consequences of the divorce when my parents parted ways. What was most evident to me in this situation as a female, was the importance of a solid education (beyond the limited education my mother had as a result of growing up in Europe during WW2). And especially the importance of having your own money and savings. This in itself would have provided so many more options for my mother once divorced. We were luckier than many as Dad paid his maintenance and were always fed, clothed and had a roof over our head, but I dread to think of the consequences if this wasn’t the case.

Fast forward a few decades, and looking back after my own divorce, I can see how my emotions and the consequences of social conditioning got in my way and ultimately cost me money.

For example, when I divorced, my ex benefited financially from my investment activity (I should have stayed firm about us signing a pre-nup but I allowed emotions to get in the way).

Even though I came out of it still being able to buy my own home and with some investments still intact, the biggest lessons for me were;

1. Don’t wait for others to get the ball rolling when it comes to creating your own financial independence because time is of the essence. This thing called compound growth has a massive impact on your financial outcome and for every 10 years you wait, your wealth decreases by half!
2. Always keep your emotions out of it when making financial decisions. This is what leads to bad decisions being made time and time again. Deal in facts and move forward on that basis.
3. While the fairy tale may happen, hope for the best but always plan for the worst. Seek professional advice around investment structuring and how to protect your assets that you bring into a relationship, especially if you plan to have children. Think pre-nup, even if your assets are equal going into the defacto or marriage arrangement.
4. If you have or plan to have children, you must factor in the time you will have away from the workforce and how this will affect your income and your ability to fund your retirement via superannuation contributions.
5. Consider the ‘sandwich’ generation of women and plan accordingly. These are women with older kids still living at home who may also need to take time out of work to care for ageing parents.
6. As nurturers, many women tend to put others ahead of themselves, sacrificing their own needs and financial security in the process. It is not selfish to create your own financial security ahead of helping your children.
   
   In fact it’s important to teach your daughters in particular to look after themselves first. I see plenty of 50 year old female clients who are torn trying to decide if they should buy their children a home to give them a helping hand, or buy themselves a home or create income for retirement. To be blunt - stop it! If women don’t look after themselves first, they can’t help their children and never assume your kids will look after you in return. They simply may not be able to, or could have a spouse who could prevent it from happening. This is a contributing factor to the increase of ‘middle class homelessness’ among women aged 50 plus.
7. Don’t assume gold digging is a female only trait. As I have gotten older I see plenty of men seeking to hook up with women who are financially secure. They may be toy boys looking for a sugar mummy or older men who have themselves hit hard times or divorced, so protect your assets and learn what situations, such as living with a partner, can make you financially vulnerable. Then put agreements in place to protect yourself.

While it may appear that I am painting a picture of doom and gloom, it’s a sad reality for many and will only get worse over time if women don’t start taking action to empower themselves financially.

In the meantime, go forth and prosper!

Miriam Sandkuhler is the founder of Property Mavens - a specialist property advisory firm based in Melbourne.