Ever indulged in a little more retail therapy than you meant to? Ever bailed out an ex? Or woken up one day and realised you didn’t know as much as you thought you did about your money?
Not all women make these mistakes – and not all men avoid them, says Alexa von Tobel, founder and chief executive of US financial advice website LearnVest.com.
“But in our experience, these are a few female financial problem areas that can lead to major debt and lots of stress,” she said.
Letting someone else handle the finances
“We constantly hear from women who spent years taking the hands-off approach to their finances, but are thrust into responsibility,” said von Tobel.
To take control of your finances, start by finding out exactly where your money goes each month. You might be able to list most of the big-ticket expenses in your life – such as your home loan repayments or rent and bills. But often it’s the smaller sums of money you spend each week that can really add up – such as your daily coffee fix, which at $4 will cost you $1460 annually – which could be more than the cost to insure your car or buy Christmas presents for the family!
Track your spending with a free smartphone app, such as the federal government’s TrackMySpend app or Budget Planner and make cut backs, where possible. To find out more visit MoneySmart.gov.au.
Not talking about money
“It’s terrifying how many couples don’t discuss their finances until something goes terribly wrong,” said von Tobel. To be fair, she says, the blame for this mistake lies equally with both partners.
Having a plan and being proactive in managing your money could save you thousands of dollars, and help you sleep better at night.
Do some research online using a site like RateCity to compare financial products. RateCity found that borrowers could save up to $1500 each year by comparing home loans and switching and up to $380 by refinancing their credit card – it could be the best return on your time you find all year.
Now is the time to sit down and have a serious talk with your partner. In a marriage, miscommunication about money can lead to arguments and even divorce. Create a calm environment to speak in and be sure to have a discussion with your spouse, instead of at them.
Putting the kids first (and only)
“You have to put on your own oxygen mask before you can assist others,” said von Tobel. “It’s true in personal finance as it is as 30,000 feet.”
You’re no good to your family if you’re no good to yourself, she said. Teaching your children through example is one of the best ways to demonstrate good money management – as is the occasional splurge on yourself as a reward.
The number one mistake
Finally, the biggest mistake women make is they don’t start saving early enough for retirement, said von Tobel.
“In your 20s and 30s retirement seems so far away,” she said. “But starting to save in your 20s means you don’t have to save as much in your 30s, 40s and 50s because the money will do the work for you.”
The reason is the power of compounding interest, she explained: “It’s not magic, it’s just math; you save early and your dollars actually work harder for you as time goes on.”