Women tend to have financial needs distinct from their male counterparts’. Factors such as a longer average lifespan, working less due to familial obligations, and getting paid 78 cents for each dollar a male makes all contribute to differing economic necessities. Some women also unknowingly create even more barriers by making common financial mistakes, which result in difficulty fulfilling their monetary objectives. By understanding such errors, it is possible to take better control over your money, eventually resulting in a healthier financial position over the long- term. Five frequent mistakes to avoid include:
1. Letting someone else take care of your finances.
You should never completely turn over the responsibility for managing your finances to anyone else. This is including, but not limited to, an adviser, spouse, family member, or friend. By staying informed and engaged about your own finances, you can empower yourself with the knowledge to make healthy decisions for which you can take personal responsibility, and be happy down the road knowing the choices you made were your own. It is your money after all, so you should know exactly what you are doing with it.
2. Being too conservative with your investments.
Women typically live longer than men, and therefore need more money for retirement, but are not as aggressive with their investment choices to accomplish such a goal. You should invest based on your risk tolerance and time horizon, while also not being overly conservative. At least part of your portfolio should be invested for growth to maximize your return, instead of investing all of it in a safe but low-earning option, such as a CD. This will help provide for those extra years you are living.
3. Supporting children’s needs over your own.
Women have a tendency to put other people’s needs before their own, especially their children. When it comes to adult children, the best gift you can give them is to be financially independent yourself and not be a burden to them later in life. To this end, it is important not to give away too many of your assets early on, especially to your children, so that you do not put your future financial security in jeopardy.
4. Not talking to your spouse or significant other about financial matters.
For various reasons, women have a tendency of not wanting to talk with their significant other about financial matters. It is important that you both have an understanding of the family finances and be able to set goals as a couple. Either of you should be able to step in at any time and be equally knowledgeable about everything from the monthly budget to insurance to investments. An easy way to improve this situation is to schedule a “date” where you regularly discuss your finances. Making it a routine part of your relationship will take away the awkwardness and help you achieve not only your personal financial goals, but also those for the two of you as a couple.
5. Procrastinating on financial decisions.
One of the main obstacles to effectively plan for long-term financial goals is procrastination. Women have a tendency to put off making important economic decisions due to a fear of making a mistake with their money. In this situation, the best way to overcome this lack of confidence is to educate yourself. Enrolling in some type of financial class or workshop, or, speaking with a professional such as a Certified Financial Planner practitioner will help you feel better about your decisions and make them in a more timely manner, thus increasing your financial success.
In considering these five common financial mistakes that are made, it is important for you to remember that you yourself are in control of your financial future. Careful planning and financial education are key, to not only help you avoid the above financial mistakes, but also work toward living the lifestyle you desire.
Pamela Plick is a member of the DailyWorth Connect program. Read more about the program here.