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Money concerns constrain women’s life choices

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MEDIA RELEASE: One in three women don’t have enough money saved to allow them to make significant life decisions like changing jobs or changing relationship status, according to research by Fidelity International in Australia.

The study, The Financial Independence of Women*, found that many women feel trapped by their financial situation, and lack the confidence or knowledge to break out of their circumstances.

Alva Devoy, managing director of Fidelity International, said the financial vulnerability felt by many women has more significant consequences than simply needing to prioritise or compromise on expenditure.

“We are hearing that some women feel locked into toxic work cultures or personal relationships because they are constrained by their financial circumstances.  The goal for financial independence continues to remain out of reach for too many Australian women,” says Ms Devoy.

When asked to define financial independence, the most common answer given by women is having a personal income so you don’t have to rely on financial support from others. But fewer than one in two women (49 per cent) says they feel financially independent, compared with around three in five men (58 per cent).

According to the research, one in five adult women has trouble making ends meet, and can’t easily support themselves and their family. For men, the figure is half that, at one in 10.

Furthermore, women are twice as likely to say their personal income doesn’t cover everyday expenses and bills. One in seven women disagrees that their income covers their everyday expenses and bills. For men, it’s only one in 14.

Ms Devoy says this lack of financial control can have long-term significant effects.

“We are already seeing the potential impact of a lack of financial independence and confidence, with women over 55 now the fastest growing group to experience homelessness in Australia.

“Another recent Fidelity study of older Australians shows that women continue to feel less engaged with their finances, with only 10 per cent of pre-retiree women saying that they feel in control of their finances compared to 25 per cent of men.

“Not only does this leave them at risk in the future, but it also has a significant impact on their overall wellbeing, including both mental and physical health, today.”

The research found that more than half of pre-retiree women say that financial stress has, or is, impacting on their health.  A significant minority of men (two in five) are similarly impacted by financial stress.

“The positive news is that the majority of women say they want to make a change,” Ms Devoy says.

“Most women (seven in 10) are motivated to achieve their financial independence. Two in three women say that they would like to take more control of their financial future but they are not sure what to do from here.

“There is a significant opportunity for the finance and investment industry in Australia to step up and do more to support women in this goal. Around one in two women say that investment communication is complicated, and one in four describe it as intimidating.”

Ms Devoy says it is also important for the industry to recognise what it is that women are looking for from a financial planner, and how to meet that need.

“While two in three pre-retiree women want to work with a financial adviser, only one in 10 wants a professional to take care of everything for them.  Instead, a significant majority (almost three in five) want their adviser to support and guide them, but still want to be in control.

“As we know, people who receive financial advice tend to be more confident and positive about their financial situation, and our research has shown the same trend.  Of those women who are not yet retired, and who have a financial adviser, one in five says that they rarely or never worry about money, compared to one in seven unadvised women.

“And advised women have more confidence in their capabilities. Advised pre-retiree women are about five times more likely than unadvised women to rate their knowledge of financial matters as very good.

“This kind of confidence is key to taking control of your financial future and engaging with strategies and plans that provide a solid financial future,” Ms Devoy says.

* The Pathway to Financial Independence study (‘Financial Independence study’) was conducted in the field in January 2022.  It was undertaken online and involved 2,017 (n = 2,017) adult Australians

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