Essential tips for managing your money whatever your stage of life

The old saying is that ‘Money can’t buy happiness’ but it’s not the entire truth. Studies have shown that happiness does correlate with income, and the link comes down to the choices that it opens to you.

Going further, an ASIC-commissioned study found that people experiencing financial difficulties are twice as likely to encounter mental health issues and that supporting recovery in financial wellbeing can also improve mental health.

There is a range of steps you can take to support your financial well-being, at any stage of life, and in honour of Women’s Health Week being this week, Nina Kazmierczak, Founder/Partner and Senior Financial Adviser for Esencia Wealth, shared her tips.

Money, money, money – steps everyone should take

While factors like whether you have caring responsibilities or a mortgage might change the steps you should consider, other things are universal regardless of circumstances.

“Have a goal and a plan to achieve it. It’s important to know what you’re spending. Have a budget in mind, even if it’s a target. Be realistic – what can you do with what you’ve got to get the best outcome?” says Kazmierczak.

She also reminds people of the value of compound interest: “the sooner you start saving and investing, the more time your money has to grow”.

The single life

If you are single, be it young or mid-life, Kazmierczak recommends your next focus after goals and budget should be on addressing any debts you have and have an emergency fund.

“If you were to lose your job today, how long could you survive before you had nothing left to meet your basic living needs? What’s your back-up plan?” she says.

From an investment perspective, “there’s more out there than just a high interest saving account.”

“Consider a mix of stocks, fixed interest and real estate. This can be achieved with less than you think. Technology can make financial management easier,” Kazmierczak says.

How caring responsibilities change the game

Whether you care for young children, elderly relatives or other loved ones, there’s no question it can affect your finances.

Money with kids

When it comes to parents of young children, Kazmierczak encourages putting anything you can away – “something is always better than nothing. This is where the power of compounding can help.”

“Know what the costs are likely to be and how much, if any support or subsidy can be obtained,” she says, pointing to the government-funded Child Care Subsidy and kids vouchers.

Those planning to have children should consider access to the government-funded Paid Parental Leave payments for up to 22 weeks.

She also suggests the idea of ‘buckets’ of spend.

“Something just for yourself is very important, for example, the daily coffee. Then the kids’ activity bucket with a per week or month spend. Plus the family finances bucket for groceries, utilities and other bills, which can be shared with a partner,” says Kazmierczak.

Caring for others (elderly relatives, unwell partners, etc.)

It’s a reality that the sandwich generation knows all too well - the mental, physical and financial challenges of caring for their elderly relatives. It’s also one that certain steps can alleviate the struggle.

Kazmierczak suggests the following:

• Look into support or subsidies to help with expenses, such as family benefit carer payments or the aged pension scheme.
• Ensure there is an estate plan in place and you have current Power of Attorney and Enduring Guardianship documentation.
• Understand your relative’s finances and what might be available for their needs.
• Research the costs of different long-term options such as in-home care, assisted living or retirement homes.
• Having an Aged Care Assessment team can help.

Investing when you have caring responsibilities

Many in these circumstances don’t have time to monitor their investments so Kazmierczak suggests it can be helpful to set up regular withdrawals into savings or high-interest accounts.

For some, passive investments could be an option.

“Options that don’t require constant monitoring and action include ASX-listed ETFs that provide exposure to the Australian ASX or global indices, such as the S&P 500. You can invest in these via trade platforms with low fees,” Kazmierczak says.

She adds that you can find ‘pre-made’ diversified options that can help ensure your investments are spread across asset classes like stocks, fixed interest and real estate.

Getting close to retirement and without caring requirements?

When you are nearing retirement, you should be starting to consider how much you will need to live on.

“The bottom line is that you should know what your income needs will be, to then determine how much capital is required to pay that income. If there is any outstanding high-interest debt, try to eliminate it as best you can,” says Kazmierczak.

This period is also an opportunity to focus on boosting your superannuation. You might want to look into employment strategies like salary sacrificing or check your eligibility for other contribution options, such as partner co-contributions or the government co-contribution for lower-income earners with low super balances. Be sure to check the contribution rules at ato.gov.au.

The one thing you should start doing today to improve your financial well-being

Kazmierczak wishes Australians would prioritise financial literacy as it is a critical component to improving your finances.

“It helps us understand and manage our finances, including budgeting, saving, investing, debt – especially credit cards. It helps us plan for retirement. It could help us recognise and address warning signs,” she says.

“But more importantly, it helps us achieve financial independence and reduce stress about money.”

It sounds a lot like creating choice and happiness, doesn’t it? There’s no better time than now.