Why financial independence has never been more important

2020 has well-and-truly highlighted the need for economic empowerment.

By BTYB Stella
What. A. Year.
It's certainly been a rollercoaster 10 months, filled with more curveballs than any of us could have ever predicted on 1 January.
However, it's also been a year filled with deep reflection. A year that's seen us unite and challenge the status quo, advocate for future generations and ultimately start some very significant conversations.
One such conversation that's bubbled under the surface over recent years, but that's really come to the forefront in 2020, is that of financial independence.
With Australia's unemployment rate rising by 2.8 per cent (358,400 people) over the past 12 months — largely due to COVID-19 — being financially literate and independent has never been more paramount.
Here's a guide to what financial independence is, the key benefits of economic autonomy and steps you can take to help secure a more financially independent future.

What is financial independence?

Financial independence is about more than what you earn or what you spend; it's about having complete unlimited control over every aspect of your finances and not being reliant on anyone else to make financial decisions for you.
While financial independence looks different for every person, and can differ depending on life stage, it ultimately comes down to the same thing: understanding how to spend, save and invest your money wisely (even if you're not in a position to invest right now), and being accountable for your own financial decisions.

Why financial independence is so important?

Unemployment insurance
2020 is the perfect example of that 'rainy day' that we all know we should save for, but perhaps haven't been. Big changes such as redundancies, industry closures and unforeseen health issues can happen to any of us at any time so it pays to be prepared financially. Financial independence is ultimately about not living paycheck to paycheck, but rather having a comfortable savings account that you can turn to in times of emergency. A small emergency fund can help take the pressure off whether you're employed or not; it gives you freedom to make choices and to change direction if you wish.
Live on your own terms
When you're financially dependent on somebody else — whether that's a person is a spouse, a family member or a housemate — you're not only tied to that relationship in some way, you don't get complete ownership of your financial decisions. While there are are many pros and cons to shared accounts, it's important to remember that a degree of financial autonomy is always recommended so that if you do ever find yourself wanting to exit a relationship or situation, you can comfortably and confidently do so.
If you or anyone you know is in a relationship and don't have the financial means to leave, you can call 1800 RESPECT for free confidential and personal advice.
Freedom to spend
It may sound frivolous, but when you're financially independent, you are at liberty to spend your money the way you want to. There's no need to ask permission to borrow money or buy certain things — you're in control of every cent. It's an empowering feeling and one previous generations didn't have; something it's always good for us to keep in mind.

How to become more financial independent:

Make a budget and stick to it
Set your money goals, then begin tracking your current spending habits. Download an app or look at your bank balance to see where it is your money is going, where you can afford to save and where you need to spend differently.
Set up your budget in accordance to how you get paid. Once you look at your hard costs (i.e. the costs you can't compromise on such as mortgage payments or rent, school fees, direct debits), you can begin to see areas you can cut back on.
Rather than setting it up and then never looking at it again, hold yourself accountable to a monthly check-in. And optimise it: if your budget isn't working, re-do it.
Find companies that cater to your needs and values
It pays to be savvy with non-negotiable items and look for not only the best deal, but companies that reflect your values. You're less likely to see something as an annoying expense if you feel that it's benefitting you in an additional way.
Stella Insurance is a company that prides itself on providing more than just car insurance. Both the brand, and its products, are designed with what women want in mind using research from their customers (women!) to tailor its policies to suit. That means benefits such as up to $2,000 for baby gear that is damaged in or stolen from your car, and up to $1,000 for certain personal belongings, like a handbag, that are stolen with your car or damaged in an accident.*
Beyond this, Stella has created a community (@stellainsurance) to educate, empower and support women across a range of areas, including financial savviness, to help change the status quo for women in Australia.
Educate yourself
Research shows that 85 per cent of women under 35 in Australia don't understand fundamental investment concepts. But with the stats also revealing that women are better investors than men — we research our options more thoroughly and commit to investments for long term — it's time to change that first stat.
Seize the opportunity and head to moneysmart.gov.au now. Get yourself up to speed on all things savings and investing and then get your friends involved too. Your group chat will soon become a mix of reality TV and money matters, and you'll all be better for it.
Brought to you by Stella. Car insurance for women, by women.
Policy terms, conditions, limitations and exclusions apply. Any advice provided is general advice and does not take your personal circumstances into consideration. Please read the Stella product disclosure statement (PDS) available at https://www.stellainsurance.com.au/legal for the terms, conditions, and exclusions before purchasing this insurance. Stella Underwriting (ABN 72 633 811 319) is an Authorised Representative (AR 001282046) of Allstate Insurance Pty Ltd (ABN 82 073 267 053, AFSL 239010) which is acting under its own AFSL on behalf of the product issuer, QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFSL 239545).

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