Returning to work after children: Finances, Joint bank accounts, and money stuff to help your children set themselves up early for success.

Work arrangements used to care for children

Fathers and mothers in paid employment report using very different working arrangements to care for children. 

Research shows almost 60% of fathers do not use any flexible working arrangements to help care for children compared to one-quarter of mothers. More than 40% of mothers work part-time, compared to only 4–5% of fathers. 

The most common arrangement for both parents is flexible working hours. The next most often reported working arrangement is working from home.[source: aifs.gov.au/facts-and-figures/work-and-family ]

Finance basics for women ready to work from home

Being able to manage your own finances is incredibly important. I had a financial head start in life, my mum was an accountant and lawyer in Australia and my parents built multiple investment properties while I lived at home.

The first positive steps they did to groom me for my financial stability were to encourage me to study economics, small business and accounting during my teenage years at school. Later I graduated from The Univerity of Newcastle with a Bachelor of Commerce, majoring in Finance and Commercial Law.

Some basic economics for entree…

Inflation

Inflation is the rise in prices generally in your country and leads to you losing buying power with your income. So it’s important to know that any annual pay rise you get must be greater than inflation otherwise you could be going backward financially in your career.

Companies

In your daily life in Australia and New Zealand as a small business owner, you’ll come into contact with two types of companies.

  1. Listed companies
  2. Private companies

Listed companies are large companies that have passed specific requirements allowing them to sell company shares (or stocks in the US) to raise money from the general public. The general public can use a stockbroker or a DIY share trading online platform like Commsec to buy publicly listed shares. Shares can cost anywhere from 1 cent to $1100+. A brokerage fee is paid to your stockbroker usually around $20 per purchase or sale.

Private companies are usually owned by small business owners and for less than $1000 most Australians can complete a few forms and have their own private company, to act as the tax structure for their small business. In Australia, private companies have Pty Ltd at the end of their name. In New Zealand, they have Limited after their name.

Your sources of money after children

  1. After having children, your income will come from part-time wages, if you’re an employee to another business or from your own business profits. Some women are also entitled to receive maternity leave payments. PRO TIP Maternity pay might be dripped to you over 12 months or you can request the full amount upfront. Definitely take the upfront lum sump, due to the interest that can be earned on the full amount. “A dollar today is worth more than a dollar tomorrow”.
  2. Working mums can also receive income from investing in the share market. This is income in the form of dividends from listed companies and from capital gains after selling shares on the stock exchange.

Investment Income Basics

Saving for your retirement doesn’t need to rely on your willpower !!

Saving for your retirement should start early in life and with compound interest, the sooner the better.

Don’t rely on will power for your retirement plan. Set up a direct debit taking regular amounts from your income to your savings bank account.

As your savings account grows you can start to purchase shares from listed companies. Seek out a registered financial advisor or accountant in your country if you need help.

Australians can purchase shares of Australian Listed companies like XERO & AfterPay as well as internationally listed companies like Google, Apple & Disney. These can both be traded online once you open a Commsec account.

Dividend income will be given to you when the company decides to pay all shareholders a dividend. Usually once or twice a year. The dividend will either be franked or unfranked. Franked dividends are company profits where tax has been paid already by the company for that profit. Therefore when the profit is given to you as a dividend you don’t have to pay tax on it again, as the same $1 of profit can’t be taxed twice by the government. You’ll get a franking credit on your statement from your stockbroker and these details are recorded in your personal income tax return.

Unfranked dividends are dividends paid to shareholders but there were no tax credits for those payments, so there is tax for you to pay on that income in your personal income tax return.

Joint Bank Accounts

If you’re ready to start a family you might be considering having a joint bank account with your partner.

After two wonderful long term relationships, (10 yrs, currently 12 years) I’m no expert, but reaching a ten-year milestone taught me:-

Your husbands’ role is not to support you financially all the time. His role is just to be there for hugs.

Either you or your partner can become unemployed at some time or another and this is a time to support each other rather than pack your bags.

You and your partner will have different spending priorities and when you are aware and accept their priorities and listen to the reasons then you’re better off than most couples. eg my priorities are best quality fruit veg and children’s clothes and activewear 🙂 my husbands’ are different…

Your partners’ debt is your debt. If your partner has a credit card problem or bad credit rating then you need to sort that out pronto. Working with a financial advisor or accountant can help you eliminate credit card debt and get back on track to creating your investments.

Regardless of the term of your mortgage make more frequent repayments and pay more than is required, especially in the early years, so you can build up a buffer if you’re sick and unable to make repayments and also so you build your equity in your home faster. The longer you have a mortgage the more interest that loan is costing you. That’s money that could be put in your savings and investment accounts.

Have your own bank account as well as a joint bank account so you can have some autonomy, especially if you want to drop $1,000 on balayage 🙂 #hairgoals

Money stuff to help your children succeed

Teach your children how to donate and invest a portion of their pocket money each week. Help them understand compound interest and how allowing their savings to earn interest will allow their money to grow.

Teach them the major pitfall of spending more than they earn through credit cards. That is, unpaid credit card debt can damage their ability to get a home loan!!

Help them learn how to make money through casual work during their teenage years. Help them reach a savings goal by setting up a direct debit to their savings account.

Money does not define their worth as a person. Money is earned through work and investments and not all debt is bad.

Credit card debt can be a bad thing when it’s used to support a habit of mindless consumption, but

Debt like business loans and home loans can be good debt as they support your ability to generate more income or build equity in your home for the latter, rather than building equity in your landlords’ pocket.

Waiting to win the lotto or inheritance is not an investment plan. Your child is better off saving $2000 per year at 10% compound interest for the next 40 years to reach an amazing one million dollars approximately. Pro tip: Read The Latte Factor and the Barefoot Investor. For best results pay a qualified and licensed financial advisor. Pro tip: Watch the goal setting Facebook Live session from 2019 with Award Winning Financial Planner, Helia Singh here

Happy financing. If you’d like to chat more join me for my next class. Click here https://www.kimhinkley.com/waitlist

Ready to make 2020 the Year You Make Progress? Read more here.

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