One of the things many of us love about our mum, is that she is often the one person you can rely on to drop everything to come to your aid when needed. It’s one of the stereotypes across cultures that mums tend to put the needs of their kids ahead of their own.
This is a wonderful trait and it’s the reason that microfinance organisations, like the Grameen Bank, lend predominately to women. Research shows that a much greater proportion of money goes to improving the lives of children, when business loans are made to women.
Unfortunately this propensity to put the needs of others, especially children, ahead of your own, comes at a cost. It has been well elucidated over the last few years that women find themselves with much smaller assets than their male peers in retirement and are more vulnerable to economic insecurity once they cease working. This is often as a result of limiting their time in the workforce to act as the primary carer or using their incomes to pay for child care and school fees, as examples, instead of acquiring investment assets and making contributions to super.
Each year on Mother’s Day, I encourage all mums to reframe the way they think about helping their kids and others that they love. Just like the aeroplane safety announcement which encourages you to fit your own oxygen mask before helping others, you will be best able to assist others if you can come from a position of strength. This is physical, mental and importantly financial. Without diminishing some of the broader challenges that continue face women financially, in the same way that sometimes you are a better mum when you have had the opportunity to have a short break from the family, dedicating some of your personal or family income to your own financial security will not only help you feel confident but may also help you be a role model for your kids.
Positively, this year’s budget provides some additional opportunities for mums to save, particularly into super:
- There will soon be the ability to make ‘catch up’ contributions to super, effectively averaging the ability to make pre-tax contributions to super over 5 years. This is great for mothers who have not been able to make super contributions while on maternity leave. There are tonnes of things that compete for your income when you return to work after having kids, most notably childcare, but the long term benefits are compelling.
- There is the ability for your spouse to contribute up to $3,000 to your super while you have a low income. You get the benefit of the extra money in super, and your partner can receive a rebate of up to $540.
- There will be an ability to claim a personal tax deduction on super contributions, regardless of your employment, which is terrific for women who work part time and also have a business of their own.
- The budget introduced a superannuation contribution tax offset of up to $500 for those who earn $37,000 or less. This means that coupled with the change above, super will not be eaten away by taxes if you are working part time or have a low income.
- While much of the financial commentary is about new mothers, some of the biggest financial challenges are faced by older women. Tuesday’s announcements will extend the ability to contribute to super to age 75, without the need to meet a work test. This may allow more women to make use of the tax effective environment if they downsize their house or receive an inheritance later in life.
Helping your mum augment her super, which can provide her with a steady income as she gets older, might
be a wonderful way to demonstrate your affection and gratitude this Mother’s Day. But this year’s budget, and superannuation in general, will not be a magic panacea for the financial inequality between genders. However when women harness their desire to help others by first helping themselves, they may find that not only are they more independent, but they might also have a hand in creating a next generation of financially savvy, motivated Australians.