“Do I need to make contributions?” All of your superannuation questions answered.

You'd be forgiven for tuning out whenever you hear someone bring up that dreaded, finance-y word: superannuation.

It often comes alongside other fun words like 'investing' and 'retirement', and I can barely plan what's for dinner tonight, please don't ask me how my long-term savings are going.

Looking out for a future self just doesn't come naturally to most people, and for good reason. Who knows what the future holds?

Watch: 5 money lessons your parents told you, that you should probably forget... Post continues below.

But please, allow me to convince you to invest (geddit?) a few minutes of your time in this article, because superannuation is a pretty important concept to get your head around, and it could literally make you hundreds of thousands of dollars.

This week on Mamamia's money podcast, What the Finance, Melissa Browne and Pallavi Sharda sat down with Melinda Howes from BT Super, to chat all things superannuation. 

Here are some of the key takeaways from that chat: 

What is Superannuation?

Superannuation, otherwise known as 'Super' is money that is set aside while you're working, so you'll have some money to live off when you retire.

If you work in Australia, your employer sends 9.5 per cent of your salary to your super fund each payslip.

It's a pretty seamless process, and many Australians don't even realise it's happening! 

LISTEN: Future You Needs You To Sort Your Super. Post continues after audio...

What are the types of Super funds?

Industry super funds are typically the default super funds for someone entering the workforce.

They invest in ETFs, aka exchange-traded funds and are usually the cheapest, most automated option. Plus, it leaves all the investment-minded thinking up to someone else.

Self-managed funds are, as the name suggests, taken care of by yourself. 

These funds are great as you can align your values closely to your investments, although they take about 100 hours a year to run, and you must keep up to date with any and all superannuation law changes.

Working out which fund to go with will mean prioritising what matters most to you. If you don't like to surrender control of your money to someone else, and are relatively financially savvy, maybe a self-managed fund would work for you. 

If you don't have much time and cash to spare, Industry super funds could be a safe and reliable option for you. 

What if I'm self-employed?

Pay yourself Super. Please.

"A lot of women are sole traders, which means we are not paying ourselves a wage, and it's up to us whether we are going to pay ourselves superannuation or not," Melissa explains.

"If you're in business, my recommendation is that you pay yourself the superannuation as if you had a corporate job.

"So, if I was in corporate and I was earning $80,000 then I should be paying $80,000 x 9.5 per cent."

Mel recommends calculating this figure, and automating your contributions to streamline the process. 

Should you make voluntary superannuation contributions?

Melissa is all for making additional super contributions to your usual, automated pay packet.

"If you were to put even an extra $20 a month in, the compound interest is going to be your superpower," Mel says. 

What that means is, the earlier you put money into your super account (no matter how big or small!) the longer that figure has to "compound".

"If you were in your 20s and pulled out $10,000 of your super this year, that is worth half a million in retirement."

...Yes. It really makes that big of a difference.

How can you invest in your super, ethically?

Melinda Howes from BT Super says there is a whole bunch of ways you can ensure ethics are at the forefront of your Super fund, even if you're working in an industry. 

"Sustainable or responsible investing really refers to the way the Super Fund invests looking at three key factors," Melinda Howes from BT Super explains. 

"They're called ESGs. So environmental, social and governments."

Companies that have sustainable investing policies ask the questions:

• Is the company we are buying shares in protecting the physical environment in which they operates?
• Are they supporting the people and communities in the countries in which they operate?
• And are they conducting themselves lawfully?

If you'd like to work out if you are investing ethically, Melinda recommends asking your super fund: 'Do you have a responsible investment policy?'

Ethical investing is another option for super holders working with industry funds, which for allow for an even closer alignment with your beliefs.

If there are particular industries you would not like your super invested with, you can ask your fund: 'what ethical investment options do you have available?'

Do you need superannuation insurance?

There are two types of superannuation insurance you can access, but ultimately, whether you apply for it will come down to your values. 

Life insurance can help ease the financial stress on loved ones and is good to consider if you have any dependants.

Alternatively, there is total and permanent disablement cover. 

"If you get too sick or injured to work, it will pay you a lump sum to see you through the rest of your life to repay your livelihood," Melinda explained. 

Have a chat to your provider to see if this is something you'd like to invest in.

Feature Image: Instagram.