Back to Blog
Young adults are in a position to save for their future but sometimes lack the financial literacy, which in turn can affect their confidence in accumulating wealth and becoming more dependent in life.
Back to Blog
Financial circumstances affect your mental health and your ability to improve your financial circumstances can depend on your helpful or unhelpful thoughts. For example, some people are more dependent and don't value being financially dependent but people around them struggle as they feel it is a burden.
As well as focusing on the quality of your thoughts it is also important to have a good level of financial literacy to improve confidence (not over confidence) and empowered to make the right decisions for yourself and know which services to access to help you along your journey.
What is your psychology about money? Do you enable others to be dependent on you? Do you struggle to save? Do you struggle to overcome gambling issues? Do you have anxiety and depression over financial stress?
Financial wellness is important in helping you on your journey to improving your financial circumstances. Improving your financial literacy as well as the psychology of money can be the platform you need to start improving your ability to live the life you want.
Back to Blog
Behavioural finance is an important aspect to consider when learning about investment decision making and wealth management as it helps us understand the how bias can influence success and failures.
Financial crisis often has an impact on our bias just as any crisis. The brain holds onto negative situations more than positive ones. Think about any negative situation in your life and how your may ruminate on it more than good memories. Therefore, looking back at decisions you made in finance and thinking about how bias will impact on what you notice can improve discernment and what you see.
The behaviours to watch in any situation and especially a crisis is when fear and greed influences decisions. Behavioural portfolio theory states that fear and greed influences investors decisions. Fear can cause the investor to diversify their portfolio in investments that are low in risk and low in savings while greed can influence investors to diversity heavily in high risk investments in the hope of high returns. As a result fear can cause investors to sell shares when a crisis hits as it is high risk. However, this activity may not be helpful if your long term goal is to improve your retirement plan. So while you notice the crisis around you and your emotions also consider your goals in your investment strategy.
While attitude influenced the 2008 financial crisis, the financial crisis in 2020 was caused by a different nature. However, attitude can influence how you manage it. While emotions can guide life, you also need to look at your strategy which would include your goals and objectives to make informed decisions when investing. If your investment strategy is to retire well, then you need to consider your long term goals, alternatively if it to live on then it would be a short term strategy.
Back to Blog
There has been considerable debate about the gender gap with superannuation where females are lagging behind males. This means that females will retire with considerably less superannuation than males. However factors such as financial literacy, values, age can influence why the gap occurs (De Zwaan, Brimble, & Stewart, 2015). Therefore, working with these factors may help mitigate the gender gap in superannuation.
For example, older individuals and those with a self managed super fund (SMSF) are more engaged in superannuation (De Zwaan et al., 2015). Financial literacy also plays a role as it will encourage the user to explore choices rather then the default option or their current one to receive a higher rate of return. It is also important to explore how well your fund has performed to compare options. The study conducted by De Zwaan, Brimble and Stewart (2015) found that females were less likely to understand the relationship between performance of the superannuation fund and risk and return.
It is also argued that women tend to spend less time in paid employment as they are usually the ones to stay at home while raising their children, earn less than men (also due to part-time work while raising children) and may have less financial literacy than their male partners or men in general as they may rely on them to manage the finances. The problem is exacerbated when separation occurs as even though superannuation may be split 50/50 there is the gap in financial literacy, getting back into the workforce after working as the stay at home mum which can result in lower income from starting at the bottom.
It is important to seek advice about superannuation, explore your options and think about your retirement early to ensure that you have sufficient funds to retire on. I also encourage a family discussion so each member in the family as well as teenagers can learn the importance of retirement planning and become more money wise.
De Zwaan, L., Brimble, M., & Stewart, J. (2015). ENGAGEMENT WITH SUPERANNUATION: Is there really a gender gap? JASSA, (4), 12–18. Retrieved from http://search.proquest.com/docview/1786577943/