If you browse Instagram on the regular, you’ve probably noticed the abundance of #selfcare hacks and tips making their way into the universe. Here’s the thing though: self-care shouldn’t stop at face masks and Sunday bubble baths. True self-care, the best self-care, extends all the way to your bank account. But where do you begin? Starting is always the hardest part. But once you have set up a few base rules, it’s a matter of automation and your financial wellbeing will flourish. Here are some key foundations for looking after your financial health and your future self.
Know How Much Money It Takes To ‘Keep The Lights On’
Whether you’re a budgeting buff or not, there is one figure always worth knowing: how much it takes to “keep the lights on.” This is the weekly or monthly amount of money you need to cover your essential expenses. Think: rent/mortgage, groceries, bills, and basic needs such as transport costs.
We all go through various “life stages,” and therefore your “keep the lights on” amount will vary accordingly. The amount you need for basic expenses when you get your first job is markedly different than, say, when you have children and, different still, when you finally hit retirement age.
If keeping a firm budget is a faraway dream, that’s okay. It’s not for everyone. Just make sure, every now and then, to check in on the amount it takes to “keep the lights on” and keep that number in mind while living your life.
To understand more about why it’s important to know your “every day” expenses, take a look at the women’s financial wellbeing guide.
Set Aside Money For The Big And Unexpected Moments
While knowing what it would take to “keep the lights on” will get you through short-term struggles, it’s also important to have a plan in place to help you be financially secure in the long-term and prepared for life’s important moments. You see, while there’s plenty we can plan for in life, there’s also stuff we just don’t or can’t see coming.
Imagine, for a second, what you would do if you were faced with separation or divorce? What would you do if you fell ill and couldn’t work? Even worse, what would you do if your partner passed away?
So, go back to that amount you need to “keep the lights on.” Figure out what you would need to cover your expenses for three months. That is the minimum amount you should have in your emergency savings.
To grow your emergency fund, figure out how much you can afford to set aside from each pay. Then, set up an auto-transfer so your specified savings amount is automatically deducted and transferred to a separate savings account the minute your pay arrives each week/fortnight/month. By automating through a useful budgeting tool like Goal Tracker, you’re taking the hassle out of saving and making it as easy and effortless as it can be.
Goal Tracker breaks your goals down into weekly targets – so it’s less overwhelming, helps you set up automatic payments and nudges when you need it most, like when you’re cashed up after payday or if you miss a deposit.
It can be scary to consider saving three months’ worth of money all at once. If so, consider working on saving just $2,000 for now. Once you’ve built the habit, you can move on to the next goal. To understand more about why it’s important to save for a rainy day, the women’s financial wellbeing guide can help.
Think About Your Super Now, Not Later
The latest statistics from the ABS show the life expectancy of women is 84.6 years, while the life expectancy of men is 80.4 years. But while that gap is relatively small, the gender pay gap is significantly wider. The Workplace Gender Equality Agency (WGEA) has calculated that Australia’s current national gender pay gap is 14.6 per cent.
So, we’re living longer than men, and we’re earning less than men, which means when it comes to retirement, we have to make our smaller super funds last longer than men!
It’s well worth your while to think about your super now – and it’s not as hard as you might think!
Firstly, consolidate all your superannuation accounts into one. This is a super important step. If you have one account, you pay only one set of fees and insurances. Dormant super accounts are a huge waste of time and money.
Also, pay attention to how well your super fund performs. We tend to sign up for a super fund and then “set and forget,” which isn’t ideal. You can compare super funds online and check items such as performance, fees, etc. If you determine another super fund might be better, you can consider transferring, although it’s worth noting that sometimes there are fees associated with transferring.
Finally, consider whether you’re young enough to put your money in a riskier fund. After all, you may have time to recover! This is a decision you should make with a finance professional, naturally.
This International Women’s Day make a commitment to extend your self-care routine to your bank accounts. Taking the right steps can set you up for success. Download Commonwealth Bank’s women’s financial wellbeing guide at: commbank.com.au/womensfinancialwellbeing
This report contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial planner before making a financial decision.
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