8 Common financial mistakes that women make

By: on 2021-03-01
Ask Phil Bradford
8 Common financial mistakes that women make
8 Common financial mistakes that women make

Gone are those days when the voices of women used to be suppressed and they were denied their basic rights too. Now, women are not lagging anymore. They have shown the patriarchal society that they are no less than men. Rather, in many instances, they are more efficient than men. So, we should work more on women empowerment and diminish the wage gap in our country and across the globe as well.

But women empowerment is impossible without having financial literacy among them. Let me explain to you with an example.

A 2019 report by the CDC (Centers for Disease Control and Prevention) has revealed that the life expectancy for males is around 76.3 years and that for females is around 81.4 years. That means, women should do robust retirement and healthcare planning. But the fact is, according to a recent CNBC report, nearly 1 in 5 working women have nothing saved for retirement.

This way, many women are committing financial mistakes due to the lack of financial literacy. Here we have listed some of the common financial mistakes that women make so that you can avoid them. Also, we have tried to provide the best possible solutions for women to attain financial stability in life.

Mistake 1: Not determining expenses

If you don’t have a spending plan, you are likely going to splurge. Eventually, you won’t be able to save for your financial well-being.

That’s why you need to chalk out a budget. List your income from all sources along with your monthly expenses, and create a proper spending plan. By doing so, you will be able to track your expenses, and if needed, you can trim your expenses to save more.

So, make sure that you are following a realistic budget without any fail. Gradually, you will become habituated with your budget, and thereby, you can keep a tab on your finances easily.

Mistake 2: Not making investments

Well, saving money is always advisable. But keeping your money idle in a savings account with a nominal interest rate won’t help your money to grow.

That’s why you should start investing. You might think that you need to know everything about investing before you invest. But let me tell you, first, you need to know the basics of investing to make your first investment. Gradually, you will master the art of investing and grow your wealth.

Women are beating men in investments: Truth or false?

However, if you have less idea about investment and are not sure where to invest, then don’t make a rash decision. You must be updated and educate yourself before investing your hard-earned money. Wrong investment can ruin your financial health.

The investment market is related to the current economy. To learn about investments, you should go through financial journals, websites, and magazines. Here is a checklist of the top 3 websites where you can learn about investments:

Mistake 3: Not reviewing credit reports

Not checking your credit reports regularly can be considered as one of the crucial financial blunders. If your credit report contains inaccurate information, it can affect your credit score adversely and your financial health would suffer. Besides, checking your credit reports help you to detect whether or not you have become a victim of identity theft.

Financial scammers may use your Social Security Number to apply for credit or make purchases by using your payment details.

Eventually, you may not get approval for a loan, a good job, rent, etc. Remember, a good credit score is important to secure a good financial future.

According to the Fair Credit Reporting Act (FCRA) of 2003, you are entitled to get a free credit report every year from the three credit reporting agencies (Experian, Equifax, and Transunion) by visiting AnnualCreditReport.com. However, through April 2021, you can get a free credit report every week from all three credit bureaus.

If you notice any inaccuracies in your credit report, dispute them with the credit reporting bureaus. And if you think that you have become a victim of identity theft, report it to the Federal Trade Commission (FTC) by visiting IdentityTheft.gov.

Mistake 4: Not paying yourself first

Are you still saving the remaining dollars at the end of the month? If so, you should immediately change this habit as it can lead to financial disaster. If you spend on discretionary expenses first, you will be left with very little or no funds for your savings.

So, you should pay yourself first and then spend the remaining dollars for discretionary expenses. To discipline yourself with this concept, you can automate your saving process and bill payments.

By doing so, the funds will automatically get transferred to a savings account. And your bill payments will be automatically debited from your account. Eventually, you won’t have to worry about paying your bills on time and you can avoid paying late fees too.

Mistake 5: Not eliminating unsecured debts

A report by Fox Business has revealed that in our country, women have more credit card debt than men. If you are one of them, you should eliminate them as soon as possible.

The reason being, unsecured debts like credit cards have incessantly high-interest rates. So, carrying unsecured debts can make you sacrifice a substantial amount of your paycheck every month. Eventually, you may not be able to save for your financial well-being.

So, you can consult a reputable debt relief company and get rid of your debts with ease. The financial experts of the company will help you to choose the best debt relief option and guide you through the entire process.

Mistake 6: Taking a break from work to raise children

Women usually fear that if they take a break to raise children, their careers and finances will suffer. That’s a good reason to be scared. We live in a society that still believes in the paradigm of women being the caregivers in the families.

So, before planning a baby, discuss with your partner to divide the responsibilities as much as possible. However, if you are taking a break from work to raise your little ones, try to keep it as short as possible.

In the meantime, try to stay in touch with the key players of your industry. Also, try to find work related to your industry that you can do from home. In short, don’t let your productivity suffer in that time.

Mistake 7: Depending on your partner for making financial decisions

Being solely dependent on your spouse for making financial decisions won’t help you to gain any experience in handling your finances. If your spouse has expertise in handling finances, learn from him. But don’t be dependent on your spouse for financial decisions.

Mistake 8: Splurging for happiness

If splurging makes you happy, you need to find other sources of happiness asap. Besides, splurging can result in blowing your budget and you are likely to live paycheck to paycheck.

So, before buying anything, decide wisely whether it’s a “need” or a “want”. In the first instance, some “wants” may seem like “needs” in your life. But if you think wisely, you may find that many “needs” in your life are “wants” in reality.

Besides, you can give back to the community or spend time with your loved ones to find happiness in your life.

Read: How to stop spending more than what you earn every month

Conclusion:

To err is human. But to be a responsible human being, you should learn from your mistakes and look forward. Don’t believe in the paradigm that being a woman, managing finances is not your cup of tea. Rather, you should know that women are better money managers and doing well with their finances.

If you have found any of these financial mistakes common with you, rectify them at the earliest and work on achieving financial stability in your life.

Besides, I hope that the points that we discussed above will help you to be aware of the common financial mistakes that women usually make and need to stay away from them.

Last Updated on: Mon, 1 Mar 2021

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