Greg McAweeney

The latest RaboDirect Financial Health Barometer (FHB) reveals that women are worse off than their male counterparts when it comes to the size of their savings buffer.

The survey revealed that females would only have a 92 day savings buffer if they were to lose their job tomorrow, compared to men who reported a 120 days savings buffer.

Overall the survey, which reflects the views and behaviours of 2,300 Australians aged 18-65, revealed that on average, Australians have a savings buffer that would only cover them for 3.6 months if they were to lose their job tomorrow, down from 4.7 months last year.

The findings come amid Australia’s rising levels of unemployment which are predicted to continue for the next two years.

According to RaboDirect’s Group Executive, Greg McAweeney, Australians can’t afford to be complacent about their savings: “Our research shows that on average, Aussies have a savings buffer that would last approximately three months. But against that, women are far worse off with just 13 weeks on average. That might not sound scary but the truth of the matter is it’s just not enough, especially when you consider all your expenses and the rising cost of living.

“We never think the worst will happen, but that doesn’t mean we shouldn’t be protecting ourselves against crippling unforeseen circumstances like losing your job. Having a healthy savings buffer isn’t just about having a little extra put aside for indulgences like holidays. It’s also about having protection to continue to fund your mortgage, childcare fees and the like until you get back on your feet. A good rule of thumb is to try and have a buffer of five to six months in a rainy day savings account.”

While it might seem difficult, Mr McAweeney says that increasing the savings buffer isn’t impossible. It requires simple planning and creating regular savings habits: “Pay yourself first when your salary hits your transaction account by direct debiting a regular amount to your savings account before you’re tempted to spend it. Do a stock take of what you’re spending your money on every month. This always surprises people and helps you to identify where you’re wasting money. If you’re funding your lifestyle through expensive credit card debit you’ll never be able to get a savings plan going. And make sure you’re using a savings account with a good ongoing rate and don’t leave your money lying idle in a transaction account that makes your bank rich, not you,” concluded Mr McAweeney.

Key findings:

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Christine Hornery

Many Australian women appear to have a mistaken belief that they must sacrifice quality of life today in order to have a satisfactory standard of living in retirement, according to financial planner, Christine Hornery of FMS Group.

“There is a lot of noise about the fact that women don’t have enough superannuation and I certainly see that almost every single day,” said Ms Hornery, who won the AFA’s 2012 Female Excellence in Advice Award. “In fact, I am so disheartened by the number of women I see who do not have enough money to enjoy an even modest lifestyle in retirement that I’m now on a personal mission to help women take control of their own financial future before it’s too late.”

Ms Hornery argues that women can have anything they want and everything they need, but they have to strategically plan for it a long time before retirement.

“Women are not prepared to sacrifice things like saving for a home, starting a family, going on holidays in order to have a comfortable living in retirement and neither they should,” she said. “But what many don’t realise is that if they have a plan, they don’t have to sacrifice anything. They can live the life they want to now and at every stage of the life cycle. As women, we plan for special events in our lives – our weddings, our children’s education – but we don’t plan for the biggest event of all: our lives.”

Ms Hornery also said women must take responsibility for their own financial future and stop thinking of their partners as a stopgap. “Many women are still tying their futures to the men in their lives and don’t consider what might happen if, for whatever reason, those men one day disappear.”

When it comes to their financial future, Ms Hornery says women are typically doing one of three things:

• Nothing
• Something – but are taking only informal advice or none at all
• Engaging with a financial product adviser but not engaging a financial planner who can help them at a strategic advice level

“Even if women are doing something, as opposed to doing nothing, it is highly likely they could be doing it better with the help of a financial planner who can look at their situation from a strategic level,” she said.

Ms Hornery is the winner of the 2012 Association of Financial Advisers (AFA) Female Excellence in Advice Award.

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