By Steve Allender, CRPC®
As they say, there is no force more powerful than a woman, and I would add that there is no force more powerful than a woman in control of her finances. I’ve worked with many women over the years and have noticed a few mistakes many of them make.
Let’s look at some of the biggest financial mistakes I see women make and how we help our clients avoid them at all costs.
Putting Their Finances Last
Women have so much on their plate, it’s no wonder that for many of them, managing the family’s budget and finances is the last thing they want to do after a busy day. Between taking care of the home, working, and raising kids, the list never ends.
But I always suggest that my female clients move “taking care of business” up on the list. There are many benefits to this, but the main one is that when your financial house is in order, the rest of your house will be in order (literally). Spending time focusing on your finances keeps everything organized so you can spend more time doing the things you enjoy.
Lack of Confidence
Unfortunately, many times men handle the bulk of a household’s finances, and thus women lack the confidence later in life to take control of their finances. This lack of confidence can manifest itself in being too conservative in your investments or even not investing at all. According to The Motley Fool, the average woman keeps 68% of her portfolio in cash and cash equivalents, compared to 59% of the average man’s portfolio. (1)
Fun fact: Men are often the opposite, and their overconfidence means they take more risks with their investments. Because of this, only 9% of women think they’re better investors than men, despite research showing they earn consistently better returns. (2)
Not Having a Will/Estate Plan
Many of my female clients are diligent savers with sizable retirement assets, but they tend to think that saving and earning is all they need to do to meet their goals. Unfortunately, this mindset couldn’t be further from the truth.
There’s so much more to being financially secure than just how much money is in the bank. Estate planning is a crucial aspect of a comprehensive wealth management strategy, especially if you want to pass assets to the next generation and protect yourself and your family as you age.
Through the proper use of trusts and other estate documents like a power of attorney and up-to-date will, you can ensure that what you’ve built over your lifetime is properly passed on while minimizing taxes and probate expenses.
Not Investing Early Enough in Life
Too many men and women put off investing or taking their financial planning seriously. This is especially important for women, who statistically make less, may have to take a break in their career to raise families, and have a higher likelihood of becoming a widow.
Due to these factors (and many more), I encourage my female clients to start investing early and take the steps they can now to prepare themselves for the future. We don’t have a crystal ball and will never know where life will take us, so it’s better to be prepared.
Skimping on Insurance
If you don’t already have a life insurance policy, now is the time to get one. If you do have a policy, make sure your policy includes the cost of raising a child, college, and maybe even coverage for a stay-at-home parent. Life insurance helps ensure your children and spouse are taken care of should anything happen to you.
You should also review your disability insurance. While often providing for children, paying off a mortgage, and budgeting for childcare or staying at home to raise kids, a woman’s income needs to be guaranteed. Make sure you cover the risk of not being able to work due to an injury, accident, or unforeseen complication. Plus, insurance is about much more than just replacing your income. It can help give your family financial freedom to grieve if something were to happen to you, and it can help replace all you do as a mother that goes unpaid.
Are You Making These Financial Mistakes?
We include all these mistakes because we’ve seen them too many times. Are you making these financial mistakes or others? If so, we can help. We specialize in working with female clients who take an active approach to managing their finances. If you’d like to chat, schedule a 15-minute introductory phone call to get started!
About SteveSteve Allender is a partner and wealth advisor at Acute WealthCare, an independent, fee-based comprehensive financial services firm. Steve is a Chartered Retirement Planning Counselor℠ who spends his days helping women in healthcare professions build a secure financial future through investment management and financial planning. Steve loves building long-term relationships with his clients and helping them address financial burdens so they can focus on what they love and how they want to spend their time. While Steve has officially been in the financial industry for over 20 years, he became hooked on learning about finances as a child when his parents taught him the basics of saving, spending, and giving. Steve enjoys all the outdoor activities living in Colorado provides, and you can often find him backpacking, snowshoeing, rafting, mountain biking, fishing, and exploring old mining communities. His claim to fame is that he is a Colorado Trail thru-hike completer, covering 486 miles of the most beautiful country on earth. Steve also enjoys a good book about Lincoln and the Civil War and is committed to his community, mentoring through Save Our Youth and helping the elderly and single moms with household maintenance through the Minute Man Ministry. Learn more about Steve by connecting with him on LinkedIn. You can also register for his latest webinar on What We Do & How We Help.