You might think you’re financially literate but if the slightest unexpected expense leaves you in a tailspin, read on as Pride takes you through seven of the deadliest money mistakes women make and how to rectify them.
Mistake #1: ‘Pension? Darling, I’m far too young…’
As if huge student loan debt or unemployment isn’t bad enough, recent studies have shown that Millennials are expected to be worse off in retirement than their parents. Understandably, the last thing on our minds is squirreling away the little disposable income we have for our twilight years. However that’s exactly what we should be doing. Putting off your pension plan until you’re older, wiser, or earning a decent salary only loses you money in the long run. Statistically, those who leave it until their 30s to prep their retirement fund end up with a third less than those who makes moves in their 20s. If you can’t afford that, just putting what you can into an ISA before transferring to a pension once you qualify for higher rates of tax relief is a good step.
Mistake #2: The Wonder Woman complex
The strong black woman tag is both a gift and curse. At some point in our lives we’re called upon to juggle life’s many balls: career, love, home, extended family, but we rarely stop to consider the repercussions on our finances. As natural sympathisers, when our loved ones ask for a loan, we’re likely to shell out, inheriting their financial burdens as their stress levels melt away. It’s great to help out your family, but it’s even better to set clear repayment schedules or book them in with a financial adviser so their problems don’t always rebound on you.
Mistake #3: Ballin’ before crawling
With all signs pointing to the fact that short of a magical lottery win we’ll be able to afford our own homes the year after never, is it any wonder our desire to dull the pain with shiny, beautiful possessions grows ever stronger? Well, slow your role says Lois Frankel, author of Nice Girls Don’t Get Rich. “A lot of us splurge on things we ‘really, really want’, and postpone saving because we think there’s time for all that ‘serious stuff’. But it’s your responsibility to secure your financial future. Every month, first pay your bills (rent, loans, etc), then take a fixed portion of what’s left over from your paycheck to use as ‘mad money’, to be spent in any way you want. And make it a habit to save a percentage of every paycheck. That habit will literally save you for the rest of your life.”
Mistake #4: Vague financial goals
If you can’t quite understand the danger of ambiguous financial goals then try doing your weekly shop without your usual list and comparing how much of what you actually need you return with. “You’ve got to know exactly where you’re going if you want to win the money game, insists Mark Allen, of The Millionaire Course. Rather than just aimlessly hoping to buy a house or car at some point, “a definitive goal like, ‘I want to own a house in the next five years, gives you financial direction. Plus, to be motivated to save money, you need something to save for. To arrive at a specific value, use the formula: current savings + amount needed to achieve your vision = your mission. A clear numerical goal is something your subconscious can get to work on.”
Mistake #5: Leaving it to the boys
Despite more women being in control of their money than ever, it’s surprising how many of us still leave the heavy lifting of responsibly managing our finances to our husbands, partners or even fathers. When it comes to the finer points of our fiscal matters, too many of us are blissfully ignorant. Reading financial planning magazines and newspapers, or simply developing your relationship with an adviser at your bank can help you take a position of power. It’s also worth checking out Susan Hayes’s book, The Savvy Woman’s Guide To Financial Freedom, which offers handy tips to help you on your way.
Mistake #6: Enforced (and unnecessary) poverty
Ever bought a dress in the sale that was a tad small and vowed to get into it by cutting out every single food item with a modicum of taste? How did that work out? Yeah… that’s what we thought! Just like crash dieting, any financial goal that forces you into a life of austerity in order to reach a far-off financial target is doomed to fail. That’s not to say you shouldn’t tighten your belt and try to save as much as you can; but don’t set your goals so high that you sacrifice your present for your future and constantly miss out on fun adventures with family and friends.
Mistake #7: Play-it-safe and sit-it-out syndrome
Forgive the generalisation but when it comes to taking financial risks, women’s attitudes are on par with those big-boned church ladies who clutch their pearls at the slightest hint of a scandal. Perhaps it’s the lingering influence of gender roles, but even the higher earners among us would rather let our cash sit in a bank account than make it work for us. Ironically, women who overcome their reservations and do, tend to be better investors than men. So seek advice from a financial adviser, conquer your fears and set about growing your very own money tree!
