Money advice: Expert’s warning over ‘Buy Now Pay Later’ payment options

A recent project by FW (Future Women), in partnership with La Trobe Financial, has revealed the top money concerns of women aged 20 to 50.

The Choose Her Own Adventure project is an interactive content series driven by FW’s Instagram community involving tens of thousands of professional women who, fuelled by the quasi-democratic power of social media polls, collectively guided a fictional friend, Anna, through a lifetime of the common crossroads faced by Australian women.

The project also included 12 polls within each of her decades, asking about the best financial choices Anna could make, and the results are telling.

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Consulting on the project was Lacey Filipich from Money School, who spoke to 9honey Money about these and many other issues that arose.

Her role in the fascinating project was to help “educate women, to help them think about these questions and what the possible options are”.

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We asked Filipich to share some of that advice with 9honey Money.

“Often, we don’t even know what the possible options are,” she says, sharing her top tips for women of every age to improve their finances today.

‘Buy Now Pay Later’ payment options

Sorry guys, but ‘Buy Now Pay Later’ is a debt, and Filipich warns against accruing a lot of consumer debt in this way.

She says an increasing number of young people in particular are accruing debt like this, which can seriously impact achieving their financial goals.

“We’ve got one in five users of ‘Buy Now Pay Later’ going without meals to meet their repayments, which tells them us they’re going to start doing a huge amount of damage,” she says.

ASIC has announced further regulation for this payment option comes into effect on June 10 under the National Credit Code, which has been extended to include them.

The new process will include “affordability checks and better transparency” to protect vulnerable Australians,” which Filipich says can’t come soon enough.

Talk about money before having children with your partner

There’s one conversation Filipich would love all couples to have when thinking about having a child.

“Make your decisions about who’s working and who’s staying home, if that’s an option for you, or how much they’re going to work, based on your long-term earning potential, not on just the next two years,” she says.

“What we want to try and do is keep both partners maintaining some earning potential, and preferably as high as they can.

“Because in the future, in your 40s and 50s, when something goes wrong … then suddenly, that if only one person is the one with the decent earning potential, if anything happens to them it’s really poor risk management.”

It’s never too early or too late to start investing

It’s always a good time to start investing, and with the many platforms such as micro-investing companies, it’s easier than ever.

“Hopefully people have had a chance to invest in their 20s or 30s, but if not, in your 40s is still a fabulous time to do that because you’ve got 20-odd years of compounding ahead of you before you’ve gone on to retirement age,” Filipich says.

Her own mother didn’t start investing until she was 49 and divorced.

“She didn’t do anything crazy, she just bought shares and more property, but very steadily, and she got to financial independence at 63,” Filipich shares.

Superannuation contributions

When it comes to making voluntary superannuation contributions, Filipich says it depends on what other plans you may have for that money.

“Super is a really tax-effective system, and if you know that the money would just disappear on something, then it’s a great option,” she explained.

“With a lot of our investment these days, you can start quite small.”

Filipich says it also pays to check on your superannuation provider, to ensure you are “minimising fees” and you also want to “make sure you’re on your investment choice”.

Superannuation providers offer a range of investment options, which members can access on their website and change to what suits their financial goals, and the ATO’s YourSuper comparison tool is excellent for comparing fees and performance across funds.

Choosing the right employer

When it comes to closing the gender pay gap, Filipich acknowledges there’s only so much women can do by requesting pay increases.

“My point with the gender pay gap is that women can’t fix that. The system has to change. And in this, I mean specifically, leaders have to change,” she says.

How women can contribute to that is by doing their best to secure pay increases in their current roles, but also by being as selective as possible when it comes to where they look for work.

“Choose your employer wisely,” she says, “Your employer is going to have the biggest impact. We all know how big an impact our boss has on our happiness.

“Companies that have a proven track record of closing the gender pay gap and paying and promoting women … there are companies that do that voluntarily.”

Increase your earning potential.

Upskilling is a great way to increase your chances of securing pay increases or changing jobs and careers.

“Focusing on improving your earning potential is a great thing to do in your 20s, and it gets you to leaps and bounds ahead in your 30s and 40s,” Filipich says.

“So that can be really advantageous.”

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Savings buffer

Setting aside some savings, even a small amount, does wonders for how you feel about your position in life and your career, Filipich says.

“You need to have a buffer fund with some savings set aside,” she begins.

“There’s great research that was done by Princeton University in 2013. They found when you’re in financial stress you’re dumber by 13 IQ points, it’s like being drunk with stress.

“What you want to focus on doing is trying to reduce the potential for that stress to really hit you hard, and the best sort of fix all for that is have a buffer fund of saved cash to get you through any hiccups.”

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.

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