8th March 2022 marks International Woman’s Day- a day to celebrate and recognise the achievements and contribution of Women across the world. While also advocating for a world free from bias, stereotypes, and discrimination. Collectively, we can all break the bias.

A significant conversation that’s sat on the backburner over recent years, but that’s come to the forefront in the last 18 months is that of women’s financial independence. Here’s a guide to what financial independence is, the key benefits of economic autonomy and steps you can take to help secure a more independent future.

What is financial independence?

Financial independence is not just about what you earn or what you spend; it’s about having full control over every aspect of your finances, and not relying on another person to make your financial decisions for you.

While financial independence can look different for everyone, and can differ depending on your life stage, background, career status and more, it ultimately comes down to the same core concepts: understanding how to effectively spend, save and invest your money (even if you’re not necessarily in a position to invest right now), and being fully accountable for your own financial decisions.

So why is women’s financial independence so important?

Back-up in the event of sudden unemployment

The COVID-19 pandemic was the perfect example of that ‘rainy day’ we all know we should save for, but perhaps haven’t had the chance to. Sudden, unexpected big changes such as job losses, redundancy, company restructures, industry closures and unforeseen health issues can happen to anyone at any time, so it always pays to be financially prepared. Financial independence is fundamentally about not having to live paycheck-to-paycheck, but rather having a comfortable working savings account that you can turn to in emergencies. An emergency fund can help take the pressure off whether you’re employed or not; and it provides you with the freedom to make decisions and to change directions if you wish to.

Freedom to spend

It might sound a bit frivolous, but when you’re financially independent, you’re at liberty to spend your money when, where and how you want to. There’s no asking permission to borrow money or purchase certain items — you’re in absolute control of every cent. It’s an empowering feeling and one a lot of previous generations didn’t have; and always good to keep in mind. Your money is exactly that – yours and yours alone. And no one can tell you otherwise.

Living on your own terms

When you’re financially dependent on another person — whether that’s with a spouse, a family member or a housemate — you’re not only tied/obligated to that relationship in some way, but you also don’t get full ownership of your financial decisions as a result. While there are many pros and cons to shared finances, it’s important to remember that a measure of financial autonomy is always recommended – so that if you find yourself needing to exit a relationship or situation for any reason, you can comfortably and confidently do so.

Steps you can take immediately to start becoming more financially independent:

  • Create a budget and stick to it. Work out your money goals, then start tracking your current money habits and everyday spending. Download a budgeting app or look over your bank balance to see where your money is going, areas where you can afford to save and areas where you need to spend differently.
  • Set up your budget according to how you get paid. Once you work out your fixed monthly costs (the costs you can’t compromise on – such as fixed mortgage payments or rent), you can see other areas you’re able to cut back on. Rather than setting it up and then never looking at it again, hold yourself accountable with a monthly check-in. And don’t be afraid to optimise or adjust your plan as needed: if your budget isn’t working, re-do it.
  • Find companies and service providers that align with your needs and values. It pays to be savvy with non-negotiable items and not only find the best deals out there, but finding companies that also reflect your own ethical values. You’re less likely to see something as an annoying expense if you feel that it’s benefitting yourself, others or the environment in additional ways.
  • Educate yourself. Research shows that 85% of Australian women under 35 have never learned a number of fundamental finance or money management concepts. But with the stats also revealing that women are significantly better investors than men (we research our options more thoroughly, develop more calculated and sustainable investing strategies, and commit to investments for long term, allowing for additional compound growth) it’s time to change the status quo. Seize the opportunity and get yourself up to speed on all things savings and investing; any area of finance that takes your interest. You’re not only benefiting now, you’re building a solid foundation for your future.

 

Disclaimer: This article is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered Australian legal practitioner or financial or investment advisor.