How high-earning women can build their wealth.

While the gender wage gap remains largely stagnant – with the Workplace Gender Equality Agency reporting that women today earn 13.4 per cent less than men – the past two decades have seen a rise in the number of women pursuing high-income careers.

They’re also demanding more – more money and more flexibility.

“Today, women are putting themselves and their careers first, and raising a family is sometimes being pushed back to later in life or not at all,” says MLC Financial Adviser Debbie Fing.

It’s become widely accepted that women are experts in their fields, Fing says, often bringing an even greater range of skills to their profession than their male counterparts.

“Hence, women are earning more, having less time out of the workforce, and demanding equal opportunities for promotion and advancement.” For those women earning good salaries now, the opportunity is to look to the future.

Money matters

As income increases, so too does the opportunity to build on and protect that wealth. That’s not only setting you up for the future but helping prepare you for unforeseen – or even planned – life experiences, whether that’s starting a family, caring for ageing parents, illness, redundancy, or death.

The fact is, despite promising changes in the domestic distribution of labour, women continue to bear the brunt in these areas, as figures from the Workplace Gender Equality Agency show. Of their average weekly working time, women spend 64 per cent on unpaid care work, compared to 36 per cent for men². To facilitate care, women often choose part-time employment, or employment below their skill level, to the extent that they are in part-time employment at three times the rate of men. Women also disproportionately take time out of the workforce to have children or care for parents, and can be left particularly vulnerable in the face of a sudden withdrawal, for whatever reason, of their or their partner’s income.

Add it all together and the discrepancy shows up in women’s superannuation balances. According to the Association of Superannuation Funds of Australia (ASFA), there’s a 42 per cent difference: men aged 55 to 64 had an average super balance of $270,710 in 2017-18, compared to women’s average balance of $157,050.

As such, it’s critical for women to make the most of their income while it’s being generated, to ensure financial security during periods outside of the workforce. Even in the best-case scenario, taking ownership of your financial future will leave you empowered by your ability to build on your hard-earned wealth, and enjoy the additional fruits of your labour.

Get clear on your goals

It may be that you want to buy a property or boost your superannuation by contributing additional funds. Or you may want to finance your children’s education. Further down the track, you may want to move into part-time employment or set yourself up for a comfortable retirement.

There are many ways you can build your wealth and make your money work for you – through being smarter with your money, including through saving and investing. But first you have to get a sense of your immediate and longer-term goals, Fing says. Understanding your goals can help you identify what really matters to you, and what you need to do to get there.

Regarding retirement, ask yourself questions like: What age do I want to retire? How much money would I need to retire then? How is my superannuation balance tracking to deliver on that? Take a look at retirement calculators to help you get a steer on what you have versus what you might need.

Regarding wealth building, consider questions like: How comfortable am I with risk? Would I rather pay down my mortgage first or invest to build wealth? What kind of investment vehicles – property or shares, exchange traded funds (ETFs) or superannuation – am I most comfortable with? What does my dream financial scenario look like at various ages in the future?

Once you know what you want to achieve, and what you’ve got to work with, setting up your savings or investment plan becomes much clearer.

Investing doesn’t have to be hard

Investing can seem like an overwhelming concept, and many people assume you need a lot of money to get started.

The truth is, you can start investing with as little as $100.

There are multiple ways to go about investing, whether it’s directly through a broker or indirectly via an ETF or managed fund. Depending on the level of risk you’re willing to take on, there are more aggressive vehicles, like government bonds. But if you are comfortable with the idea of more volatile options, you might consider blue chip shares.

Many Australians invest in property and, with mortgage interest rates at record lows, it’s appealing.

The important thing is to do your homework first. It’s also a good idea to seek the help of a financial adviser so you can better understand what you have and what you need, and what your options are.

Start with your superannuation

Growing your superannuation is one of the easiest and most tax-effective ways to build future wealth.

Unlike your salary, your super contributions are taxed at up to 15 per cent.* If you’re able to, you should consider topping it up, either as a one-off payment or via regular additional contributions. These can be made before tax or claimed as a tax deduction at the end of the year. Either way, they are an effective way to capitalise on your higher income.

At the same time, find out where and how your super is invested – its risk profile and its growth patterns. If your money is in more than one super fund, make sure you consolidate it into one account so you are not paying additional fees that erode your balance and earnings.

Seeking support on your journey

The good news is, anyone can use their income to build wealth, and there are many ways you can do so.

With the support of a professional financial adviser you can name your goals and draw up a financial plan that includes detailed strategies to make sure you are making the most of your money. It’s a great way to move ahead and build your future.