One thing that we can count on for sure is that we all make mistakes. But don't despair; mistakes can lead to bigger and better things. For example did you know that chocolate chip cookies and potato chips were discovered by someone making a mistake? And aren't we all glad that these mistakes were made!
Financially, mistakes can not only hurt us over the short term but some mistakes make it much harder to recover in the long term. I think most women can relate when it comes to some of the following common money mistakes. The best thing you can do is realize that a mistake has been made, recover and move forward financially smarter and wiser than before.
1. Ignoring gut feelings or not following your intuition: You know when things don't feel right -- if it is related to our health we go to the doctor to get it checked out. Finances are the same. If you know that you need to get your financial house in order, get it checked out by a financial professional and start looking at resources to put you on the right track. Women make up 75 percent of the elderly poor and 80 percent of women living in poverty were not poor before their husbands died. These are shocking statistics. If you feel that you are not well prepared for what your future might bring you, you can set yourself on the right track by listening to your inner voice telling you that you need help and seeking out a financial partner for your journey.
2. Rushing through financial processes: We are all busy women and sometimes we just want to "get it done." This can be a good and bad thing. When we shop for clothing, shoes or for our home we know a fair amount about brands and quality. As women, we need to take the same amount of time when shopping for financial products. The Consumer Federation of America found in 2006 that women were 32 percent more likely to end up with high-interest subprime loans, even if they had better credit ratings than men.
And when the Boston Consulting Group surveyed women in 2009, they found that 70 percent complained about subpar treatment from financial professionals. So don't make the mistake of paying more or putting up with sub-par service. Do the research and ask questions until you understand - especially when it comes to costs around the fees you see and especially the ones you don't.
3. Feeling pressured around money: I think you will agree that for the most part, we women are people pleasers. We generally don't like to rock the boat and want to keep the peace. This can be especially true when it comes to money and finances.
The National Center for Women and Retirement Research at Long Island University found that an average woman's standard of living drops 45 percent in the year following a divorce. There may be many reasons for this. In a divorce settlement, women may acquire slowly growing assets such as the home, while men get the assets that continue to grow, such as retirement and brokerage accounts in the settlement. There are many different ways to prevent this mistake: be involved in your household's financial matters, establish your own financial independence and if you do find yourself in the midst of a divorce, seek professional financial advice.
4. Hiding from financial matters: Astonishingly, women are more likely to carry a balance, pay the minimum payment on their credit cards and be charged a late fee, all of which seem counterintuitive. Haven't we always been told that women make better financial decisions? It is a curious contradiction. But there may be some underlying reasons why. Women usually have less confidence when it comes to finances and can feel pressured to look or dress well. So what can you do if you find that you are on this type of merry-go-round? Develop an on-going budget, build an emergency fund (think about selling some assets, like your engagement ring, to build this account) and avoid the pressure to buy things that you cannot afford.
5. Continuing the "financial taboo" tradition: Try this little experiment. In a group of friends start a discussion around finances -- you pick the topic; it can be on savings, spending, retirement planning or budgeting. It is amazing but what you will notice are uncomfortable looks and a quick change of subject. It just isn't "Lady Like" to talk about such things.
So don't be surprised when more women than men are behind in saving for retirement or find that their standard of living has significantly dropped after a divorce. So what can we do as women to correct this mistake? Talk, support and encourage other women when it comes to money! And if you have children, spend time talking about how money works: why you save for purchases, how good credit allows you to pay less overall, and why it is good to plan for the future. You can even share how much you pay for the rent/mortgage, food, etc. and how to make the best choices when shopping.
Money mistakes are inevitable. We aren't born with the expertise or knowledge needed to manage finances with skill and care. But don't despair; in discovering your mistakes you have taken the first step in getting it right. Just remember to pay it forward and mentor or support other women in their financial journey.
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