Ah, value. What is it? Like, really? Yes, it’s your day rates, the cost of your product, the value you bring to a client and sometimes, if used correctly, it’s a term that can magically expand a client’s budget.
Value is many things but when you apply the concept to your superannuation, it can be a game-changer.
Let’s see why...
This one goes out to all the ladies in the house
The reason we’re highlighting the gender specifics is because, unfortunately, the gender pay gap still exists.
And the real eye-opener is that when women go out on their own they often underprice themselves in not one, but two ways:
- they set their hourly/day rate lower than it should be, and
- they forget about their super – that extra 9.5% their employer was stashing away for them when they were employed.
It’s also no secret that women generally retire with less super than men. But the gutwrencher is that self-employed women retire with a super balance that’s, on average, 30% less than that of an employed man.
But it’s time to change that!
Taking charge of your super
As a small business owner you’re already wearing many hats, and the company payroll department/accountant is probably one of them. And while you’re hopefully paying yourself a wage, chances are you’re likely not paying yourself super.
And we get it. Small business budgets can be brutal. Plus, because making super contributions when you’re self-employed is generally voluntary, when the cash flow slows down, it’s easy to find an excuse to justify neglecting your super.
But what if you thought about it differently?
Paying yourself super doesn’t have to be about your future money. When you factor in your 9.5% super contribution into any pricing enquiry or invoice, you're increasing the value of the work you do and the experience you bring to the table.
In fact, your super just gave you the bargaining power to turn down the next person who’s fishing for that 10% discount. Simply say "Would you like me to do that at the expense of my retirement?" and watch them squirm.
So, how much do you need to retire?
This is the ultimate question. And the not-so-secret answer is – there's no one-size-fits-all rule. Yes, there are plenty of numbers out there that give you guidance, but they tend to be based on being an employee rather than being self-employed.
Plus, those numbers can sometimes be paralysing.
So don’t get caught up in the numbers game.
Instead, it can be liberating to realise that there’s no magic number and that, really, it all comes down to how much super can you afford to pay yourself, right now. Can you afford $10 a week? Then that’s amazing. Land a big client? Squirrel away a bit more.
Whether you start with 5% of your income or even 2%, the idea is to choose an amount you’re confident you can commit to. Anything extra is a nod, wink and tip of the hat to your future self.
And if you ever need some gentle encouragement or feel like you’re finding it hard to put yourself first, just remember this – no-one ever got to retirement and thought ‘I wish I had less super.’