Addressing the Wealth Gap Between Men and Women

In 2018, the Australian Government’s Workplace Gender Equality Agency identified that in Australia, the full-time total remuneration gender pay gap is 21.3%, meaning men working full-time earn $25,717 on average a year more than women working full-time. Currently, women retire with on average half the superannuation of men. A consequence of this is that women in retirement are more likely to live in poverty than men.

Reading about facts such as these, and frequently observing similar stories all around me deeply saddens me, and drives me to take action toward change. It is something I feel passionate about, and it is for this reason that Her Financial Journey exists. At Her Financial Journey, we support and promote the financial advancement and success of all women, by advocating for her to reach her full potential in all aspects of finance and wealth creation. We believe in a more equitable future where men and women reach parity in all financially related matters.

We believe that us women, you and I, need to take responsibility for our financial situation. We believe that women deserve and should aspire to financial success, and that aspiring to progress our financial position is commendable. We need to take matters into our own hands and take action to succeed. It needs to be driven by us as informed, empowered and responsible women.

But where do we start this journey? Below are four tips to help you start the process.

Ask for the pay you deserve

Dedicate time to really understanding your current role and value, critically assess how you’re performing and conduct market research to understand how much you should be earning. If your current salary is less than market rate, or if you’re overperforming in your current role, then ask and achieve the pay you deserve.

Asking for what salary we are entitled to doesn’t come naturally to many of us women.

Many of us believe that if we put our heads down and work hard, the commensurate pay rise will be handed to us. Unfortunately, this is often not the case. Those who ask for pay rises more often tend to end up with the higher salaries.

But what if you ask for that pay rise and the answer is no? Then ask why, and find out from the decision maker, in black and white terms, what it will take to achieve the pay rise you are after. Map out a plan with them on what you need to achieve and what areas you need to develop. Once you have this information, then achieving that pay rise is in your hands.

Apply for the promotion or higher paying role

If you’re already receiving the right salary for your role and performance, the next step is to consider whether you’re ready to take on a more challenging role. Promotion almost always comes with more responsibility and therefore often also comes with a higher salary. Find out the position description of that new role and work out what you need to do to be next in line. Let your manager and team know you’re up for the challenge when next the opportunity arises.

We should note here that there is a confidence gap between men and women (pdf), where women are generally much less likely to put up their hand for a promotion if they don’t tick absolutely all the boxes of the new role. Men on the other hand believe that if they have at least a few of the requirements they’re in for the running and will work out the rest later.

Have a think about that next time you decide you’re not ready for that bigger role, and then tell yourself you’ll grow into it once you’re there.

Take control of your super

Take charge of your super. Roll over your multiple super accounts into the one. Make extra contributions on a regular basis by setting up an auto pre-tax super contribution, small as they may be. It’s best to work on percentages here. Even 1% is better than 0%.

Review your super fees, including those hidden ones.

The Federal Government recently realised people were paying 2-3% of their super earnings to absent financial advisors (pdf). 2-3% may seems tiny at face value, but over the long-term it makes up a significant difference. Accordingly, the Government made the call that all superannuation companies had to offer a low-cost alternative as their default option (pdf). Take advantage of this intel and switch to the no frills, low cost option offered by your provider.

Find out how much money you will need to be financially free at retirement, then make it a habit to check in and check up on your super balance at least once a quarter to see if you’re on track, or whether you need to take more steps.

Be frugal with your spending, save the surplus and invest it

Are you the type of person who spends any money that comes your way and then some? Then pay yourself first – set up an autopayment into an account which is tricky to withdraw from, and to occur each time you get paid. This will make sure funds are put away before you have the chance to spend it. Don’t pretend you’re going to be able to control your spending if this is who you are. Put the automated mechanism in place instead. It might also help to get an accountability partner to help you stay on track.

How much should you put away each pay? For low to medium income earners, start small and work up slowly to at least 10% of your salary. For higher income earners, go for 30-50% if you know you should be able to live off the rest. If you need to, start small – even 1% saved per pay check should be applauded! Then once you get used to this amount, increase the saved percentage each month until you reach your goal amount.

Also, saving salary increases and bonuses is also a great option.

Resist upgrading your lifestyle to match salary increases – this is the killer of wealth creation.

So ok, you’ve done all that. What else?

• Invest – Make sure any surplus or savings are wisely invested. A good, independent financial advisor is key to this. Don’t try to gamble your own way with this one. The crucial element is outperforming CPI with your invested funds
• Start a business – Starting your own viable business is a way to accelerate higher income in the future. It takes hard work, dedication and resilience
• Become a virtuoso – becoming a known and recognised expert in your field will attract a premium price tag for whatever it is that you offer as a virtuoso in your field

Her Financial Journey exists to foster financial ambition in women. Your success is our success! Join us, let’s work together.