Financial foundations every woman should have

Disaster planning is unpleasant, as is thinking about your own death, or the possibility, your relationship might end. But not thinking about this stuff at all could land you in strife should a relationship breakdown occur, or worse, it could leave your partner or kids to do the thinking for you if you die.

Knowing the extent of all debts, insurance cover, and your general financial situation as a couple, and individually is vital to your security.

There are five basic foundations I recommend being across to ensure you your partner and your children are protected.

Set up an emergency fund.

No, this does not mean relying on your credit card. This fund needs to be a separate bank account without key card access, that is your own. Term deposits or high interest savings accounts work well for this purpose. Set and forget with a direct debit from another account and build enough savings to cover your expenses for three months.

If you suddenly lost your income, how much would you need to cover your mortgage or rent loan payments and other expenses? This buffer will give you time to breathe before planning your next move.

Make a spending and investment plan.

How much do you actually spend? I have witnessed some gross miscalculations, that gone and checked, could have seen some older women out on the street, instead of off to the movies. A 2017 report from the Australian Institute of Health and Welfare revealed a 52% increase in older women contacting homeless agencies since 2011.

Seriously looking into what you spend can be daunting, but the reality is, you’re going to spend money. And that’s okay. Understand your cash flow and avoid obvious pitfalls like unchecked splurging. To plan, create ‘pots’ of money for fixed expenses, discretionary spending, holidays, and savings.

Using the budget Planner Tool on the Australian Government’s MoneySmart website. You can plug in your numbers to get an overall idea about your financial position.

Secure your insurance.

There are three types of insurance I believe every woman needs to consider and control. These are at the core of securing your health and personal safety should the unexpected occur.

These include:

• Private health insurance
• General Insurance including home contents cars jewellery
• Landlord and business
• Personal insurance, including life, total and permanent disability, income protection and trauma.

Several types of insurance a tax deductible, so be sure to check when you file your taxes.

Be smart about superannuation.

This is almost a no-brainer. Superannuation is the most tax effective way to build your investments for the future. When you’re in a relationship, it’s important to have a conversation with your partner about who both of your beneficiaries are, and what each one is entitled to, including each other.

Make a will.

Look, we’re all going to die, but let’s not dwell on it too much. Only long enough to cover off some key issues. You need to consider:

• An executor
• Powers of attorney
• Guardianship for children
• Letter of wishes
• Advanced health directive (instructions should you not be able to speak for yourself)
• And the set up to ensure your estate isn’t all lost in taxes

All adults should have a will. If you have ever worked for an employer, you will have some superannuation. And if it outlives you, it has to go somewhere.

This article was originally published in New Idea magazine.