How motherhood hits your financial future (and what to do about it)

The stock-standard Australian, according to recent census data, is a woman in her 30s, with kids, living on a combined family income of $3000 a week. 

Does this sound like you? It could sound like Anna.

If you’re yet to be acquainted, Anna is our avatar in a game of life we’ve got going amongst our FW community. She’s a fictional woman, rapidly ageing from 20-70 and, as she faces common life crossroads, we – yes, as in you and me, and FW’s online community – are calling the shots. 

During her 20s, by the power of social media polls, we navigated Anna’s choices around study, starting a career and moving out of home. Along the way, we learned about the longer-term financial consequences of her (our) chosen path. 

Now in her 30s, the stakes are getting higher and Anna is facing some hefty decisions. 

Does she partner up? Try to fall pregnant? Jump on the property ladder? 

Chances are Anna will buy her first home mid-way through this decade. Along with the vast majority of Aussie women, she’ll likely get married or co-habit and become a parent. So what does this mean for her financial future? 

“Having a baby can – and very often does – have a really significant and detrimental impact on a woman’s economic security,” says Georgie Dent. As CEO of The Parenthood, Georgie advocates to make Australia the best place in the world to be a parent. Because we’re not there yet. 

Here, the average new mother sees a 55 percent decrease in her earning capacity for the first five years of parenthood. And this doesn’t fully recover for about a decade. 

“A lot of couples have quite a rude awakening when they have a baby,” says Georgie, who hosts an FW podcast, At What Cost?, investigating this issue. “They confront, for the first time, a set of systems and policies and attitudes that still really support mums as caregivers, first and foremost, and dads as breadwinners, first and foremost.” 

Systemic change is needed to address our country’s so-called ‘motherhood penalty’. In the meantime, financial educator and founder of Money School, Lacey Filipich, says there are ways that Anna – and we – can put safeguards in place. 

“Women can best protect their chances of avoiding this penalty through their choice of employer – and by making caring decisions with their partner that optimise long-term earning potential for both people,” says Lacey. 

“Joint earning capacity is what matters in a family.” 

In the case of Anna not having a partner – like close to a million women sole-parenting in Australia – the government’s paid parental leave increase will be all the more crucial. 

Either way, in this country, having children is not a financially savvy move. And it’s no coincidence that Australia’s birth rate is on the decline. 

Women with Cents founder Natasha Janssens, who expertly enlightened Anna (and us) on the financial outcomes of Anna’s 20s, believes that having children is one of the two biggest risks to a woman’s economic independence. 

The other one? “Getting into a relationship, as we often default to gendered norms and tend to take a step back from financial topics,” says Natasha. 

If Anna couples up, she’ll want to maintain control over her money and assets. “And keep an eye on her credit report – which will help protect her from fraud, as well as financial abuse,” Natasha adds.

“If you are partnered and decide to start a family, also explore the ability to share your partner’s superannuation, not just their take-home pay.”

On that note, between the ages of 30-39, Anna sits on the wrong side of a 23.5% superannuation gap between women and men. But consistent additional contributions – however small – will keep going a long way. 

According to the Super Members Council (SMC) of Australia, a 30-year-old on average wages that salary sacrifices $20 a week into super has $67,000 more at retirement – and pockets a tax saving now. 

That’s a lot of bang for your buck, in the bigger picture. 

So what does Anna’s life look like, as she departs another decade? 

Anna and her partner have bought and moved into an outer-city apartment, opened a joint savings account and decided to build up their funds before starting a family. After eloping and having their first child, Anna took a year of maternity leave and returned to work in a more senior job-share role, with her mother helping care for the baby. Anna also attended a destination wedding and invested in the stock market – and she and her partner are now planning to grow their family.