5 Money Mistakes for Women to Avoid

We all make money mistakes in our lives. I have, and what I try to do is to never make the same mistake twice. Being a man and working continuously for well over 40 years, I’ve had the chance to recoup my losses and make up for some of the money errors that might have cost me dearly now that I’m in retirement. But women, especially those who are married and are looking to raise a family, may not be so fortunate to recover from some of the same mistakes that men make for some very good reasons.

5 Money Mistakes for Women to Avoid

 

So in honor of Women’s Money Week, I’m going to look at some difficult situations and highlight the potential pitfalls that a woman may stumble over if she doesn’t deal with them early on. Time, which is often your friend when it comes to finance, can be your very best buddy if you take action sooner rather than later. Here’s what I’m talking about.

5 Money Mistakes for Women to Avoid

Leaving the Finances Up to Your Spouse

If you are a single woman, you should be pretty good at looking at your finances and taking care of them or at least you are familiar with your money and its comings and goings. Problems often occur, however, with married couples where the husband is in charge of all the finances and the woman is kept in the dark or feels “taken care of” by her husband. It may sound very 1950’s, but believe it or not, it is still a very common occurrence that happens even today. You may feel that things like dishonesty or financial abuses won’t happen to you, or that you will never be divorced or widowed, but you must be prepared for all possibilities and the best way to do that is to partner in all the financial decision making.

Establish you own credit and have knowledge of where all the assets are. You never want to deal with any of these things in the wake of the shock of death, divorce, illness or even abuse. A woman must make sure that her name is on all property and asset legal documents that are acquired after marriage to protect herself in all future legal matters. It may sound harsh to think that your relationship has to include these financial safeguards, buty when they’re not addressed openly, it might cause hardship down the road. Start in the beginning of your relationships as a full financial partner.

Signing on the Dotted Line

When it comes to signing off on things like wills, tax returns and other documents with financial implications, make sure you always read them from beginning to end. Legally, anything you sign you are responsible to uphold. Don’t be fooled into thinking that it won’t ever come back to bite you because your husband or advisor said it was ok to “just sign”. If any part doesn’t look right to you, be sure to question it and contact an attorney if necessary.

Letting Someone Talk You Into It

Women are just as smart as men and are completely capable of handling finances. But like anything else, you become better at things when you fully experience and understand everything. When talking about finances, make sure you get full explanations of all the terms used and the actions being planned. Do you understand why it’s being done? Does it reflect your goals and input? Get your own advisor if your husband or “your” current financial advisor (also known as “his guy”) doesn’t answer your questions or pay attention to you before you agree to anything. And make your voice heard when to comes to money decisions.

Skimping on Your Retirement Savings

One of the biggies in being unprepared for what may come down the road has little to do with whether you and your spouse are on the same page when it comes to planning your financial future. It can simply fall through the cracks if you don’t consider how you will fare in retirement if you have to face it alone. It’s a fact that women live longer than men, about 6-8 years depending on the demographics used, and as such women should be putting money away in retirement plans, as much or even more than men do. If they don’t, a woman may be facing the reality of running out of money in her retirement as these years become extended beyond those of the previous generations.

Ignoring the Alternatives

Women have been the caretakers and guardians of children and family forever even though there has been a trend in recent years for more stay at home dads than ever before. When the subject of childcare arises, working women are forced to make a huge decision as to whether they will continue their careers, cut their working life back, or even give up working entirely to devote full time efforts to raise the family. It’s a fact of life in 2016 that women earn less than men do (about 80% of the average wage for the same job as a man), and when women stop working, even for a year to have a child, they resume their careers at about 85% of their former wages. The longer they are out the workforce raising a family, the lower that percentage drops, so much so that after just 3 years it is only about 50% of the former wages.

Before making any decisions, consider the effects that all of that can have on current income, lifestyle, and even the Social Security amounts you may receive years from now since your Social Security is tied to your earnings over your lifetime. Decreasing your earnings can seriously affect you when you retire. Are there alternatives to consider? I guess the most important thing is for women to actively participate in making that decision. It may be that you opt for daycare or have another family member like a grandparent help with care. It may be that Dad will stay at home, or it may be Mom. There may be a work at home opportunity as well. In any event, the decision should be a joint one and reflect the competing priorities of family, career, and income.

 

Now is the right time to make sure you are ready for tomorrow no matter where that road will take you. Make sure you’re in the driver’s seat when it comes to your finances!

Have you taken stock of your financial future? Do you have a plan and if you’re married, have you discussed it with your spouse to make sure both parties are protected?

Image courtesy of num_skyman at freedigitalphotos.net (with changes)

8 Comments

  1. Great tips, especially about not letting someone else do the finances. I do the finances in our household because it’s interesting to me, but every month we sit down together and review them so she knows how much we’re spending, where we’re spending it, and how we’re doing on our financial goals.

  2. It’s interesting because I would be much more likely than my wife to be the stay-at-home parent. She is very open about her desire to not be a stay-at-home Mom. No kids yet but it’s nice to know we are on the same page with that. I would partially like to stay at home to work on my business ideas 😉 In all honesty even if I did stay home I think the kids would eventually go to daycare!

    1. Today, having a two-income family seems to be a necessity and daycare has become a booming industry because of it. It is probably better for children (in my opinion) to have one of the parents, either the mom or the dad, home with them when they’re small. Either way, it’s good to discuss this before the children come along so you’re sure that you’re making a unified decision.

  3. When it comes to money, my wife and I are always on the same page. Even though I’m the only one bringing in the money right now, I always make sure that any financial decision that’s being made has a buy-in from both me and my wife.

    Whether it’s on investment, retirement, or just buying grocery, we always take the time to talk about it just to make sure that everything make sense. The one thing that me and my wife don’t want to argue is anything about money.

    Since the decisions are agreed upon by both of us, there’s no way that we would argue about money because it’s both our decision. There are other things in life that my wife and I need to worry about and money isn’t and shouldn’t be in our list.

  4. Jayson @ Monster Piggy Bank

    Gary, I would share this post with my wife, who is so driven and financially responsible. She herself prefer to be not a stay-at-home parent and a type of person who is on the driver’s seat when it comes to our finances. But, she’s very understandable and open to my suggestions. That’s really a good thing.

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