Let’s talk superannuation and financial literacy with Katherine Spitzkowsky

29 March 2021

Katherine Spitzkowsky is a financial advisor and committee member of Women in Super. She participated in our International Women’s Day panel and agreed to be interviewed as part of our YAction interview series.

You can listen to the panel conversation from our International Women’s Day event which features Katherine, Helen Dalley-Fisher and Kat Reed at our SoundCloud.

Can you tell us a bit about yourself and how you came to be involved with Women in Super?

Hello, I’m Katherine! I was a public servant living pay cheque to pay cheque when I realised I needed to take control of my financial future. I jumped into a financial planning degree, switched industries and haven’t looked back. Specialising in cashflow, super and insurance, I get to help people reach their financial goals and find choice in their lives.

I was surprised by the lack of women in adviser roles, so I searched for ways to connect and network with other women in financial services and I was lucky to find Women in Super. Through them, I met a great network of inviting and intelligent women so when the opportunity came up to join the committee I jumped at it. We have different events throughout the year from pure networking to trivia and mentor walks. I couldn’t be prouder to be part of the community we are building.

 

What campaigns has Women in Super been involved in and why are they important?

One of the points I raised during the panel discussion is that superannuation contributions are not currently made to recipients of paid parental leave. The child rearing years are the point where differences between men and women’s super balances begin to show and can be a major driver of differences in retirement outcomes.

Did you know people who earn less than $450 per month from a single employer aren’t getting paid superannuation? It doesn’t make much sense, but this is the reality for many people who work casual jobs with multiple employers and they are being locked out of superannuation guarantee payments. This is of particular concern for women as we are more likely to hold multiple jobs through our university and graduate years and again when we have caring responsibilities either for our children or parents.

These are two policies Women in Super is strongly advocating for change as part of their broader Make Super Fair campaign, which you can read more about here.

 

Superannuation policy has been getting some attention lately with the early access to superannuation receiving some criticism. Was there a discernible difference in how men and women responded to this policy? What did the policy mean in regard to retirement security?

Reporting initially focused on what people were spending the withdrawn funds on, where it was seen that men were more likely to use the money on non-essential spending like gambling or jet skis, and women were paying down debt, bills or saving the money they had accessed.

As the scheme continued, super funds started reporting that women were more likely to have depleted their accounts entirely, resigning them to start over in saving for their retirement.

Some dismissed this as the accounts tended to belong to younger people, so they had time to recover the withdrawals and forgone earnings, but time is the greatest tool we have in saving for retirement and early withdrawals are much harder to overcome.

It is also worth noting, the depletion of accounts was predominantly due to women having a lower starting balance than men, rather than women drawing a higher amount.

 

You made frequent references to financial literacy among Australian women in your panel contribution at our International Women’s Day event this year.  Australia has a relatively high level of financial literacy when ranked globally. Can you begin by telling us how financial literacy is measured?

Simply put, financial literacy is a measure of how well a person manages their money and their broader understanding and ability to interpret financial information.

It is wide reaching and complex in the sense that it encompasses everything from budgeting, to understanding a mobile phone contract, to tax. There are many stereotypes around who has low or high levels of financial literacy, but I see these broken every day.

For example, I have clients who have high salaries and big superannuation balances, but they are not able to tell me what super is, how much they spend or articulate their goals for retirement.

Conversely, I have clients who have a simple set up in their super account, a solid understanding of their cashflow, but no savings and they can speak all day about investment markets and new financial policies.

It goes to show it’s not money or complexity that increases financial literacy, but engagement.

 

Does being financially literate matter? What differences in life outcomes can we see between those who are and who are not financially literate?

Unfortunately, it can have a substantial impact on a person’s long-term financial position and the potential outcome can be even more severe when overlayed with self-confidence.

Often those with low levels of financial literacy will tell themselves “there’s no point, I’ll never be good with money” or “I’ll never get that house deposit”, and give up, which will have a compounding effect on their finances over time. However, managing money is just like any other learned skill, spending time practicing and understanding different aspects of it will grow your knowledge and ability.

Once you have the foundations you can then make your own decisions around how you spend, save and invest that suits your lifestyle, rather than keeping up with the latest on Instagram. I think an eyeopener for many people is peering into their super investments and realising the default selected by the fund may not be appropriate for them, which we know directly impacts financial outcomes as super is most people’s biggest asset outside of their home.

 

The gender gap in financial literacy has been measured to be significant in a statistical sense. Can you tell us how and when financial illiteracy among women emerges and how it differs depending on identifiers around race, education and migrant status?

One point where financial literacy amongst women either plateaus or actively declines is when they partner with someone who takes control of the finances and decision-making process within the relationship or household.

We see this trend is particularly stark in older generations and more conservative cultures where women take a passive role and men are the managers of money.

Migrants can find themselves well behind with the added complexities of navigating a new financial system and language, as financial documentation is very rarely written in a straight forward manner.

Education is also a strong indicator of financial literacy, with surveys showing those who attend university have higher rates of financial literacy than those who leave school in grade 10 or 12.

The good news is a report by ACER in 2020 showed that financial literacy among teenage girls is now higher than teenage boys –we just need to keep that momentum!

 

There has been some discussion on the potential for the recommendations from the royal commission in misconduct in the banking, superannuation and financial services industry to be rolled back and the consequences this could have on women in terms of their personal safety and financial security. Are you able to share some of this with us?

The starting point for this is probably that only one third of the original recommendations have made it into law, we are still waiting on action on the other two thirds. Many commentators are disappointed with the outcome so far and you are right, there is now a risk that things will be wound back.

The focus is mainly around the responsible lending laws which provide consumer protection to people seeking mortgages by forcing the bank to prove the affordability of the loan for the applicant. Removal of these provisions will mean the onus is back on the individual to make sure they can afford what they are borrowing, which sounds straight forward but generally people will underestimate their expenses and can find themselves in trouble. The rising real estate market and mania around auctions also add pressure around this.

 

Finally, what can women do to improve their financial literacy and safeguard their financial wellbeing going into the future?

There are more financial self-help books, podcasts, financial reports on YouTube or columns in the paper today than you would believe. As there are so many different options it is important to find one which you feel reflects your circumstances and the specific topics you are most interested in.

Then turn to your friends and family, share what you have learnt and see if they have a different experience or perspective. Let’s breakdown the taboo of speaking about money; we will all be better for it.

Please remember, while general information is a great starting point, it is produced for mass, general consumption, not as a road map for your life and a checklist for your finances.

If you feel you need more tailored help, try speaking with a financial counsellor or engage a financial adviser. Again, shop around – money is an intensely personal thing and if you don’t feel comfortable, you won’t get the best out of it.

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