Mistakes women make with their finances

We spoke to Natallia Smith, director at TruWealth Advice and a financial planner with over 15 years of experience, to find out what women can do to ensure a more secure financial future. Some of the mistakes we make are surprisingly simple oversights that can easily be addressed. Others may require soul-searching and strategy to implement. But they’re all worth addressing now, for the sake of future you.

They don’t have an emergency fund

“An emergency fund or ‘run fund’ as some of my friends call it, is a fund that allows you to handle the unexpected when the time comes. It also makes it easier to deal with stressful financial situations in your life because you know you’re covered. Many women find themselves in a situation where they need to ask their partners for permission to spend, and this is a way to ensure some independence as well.”

They let their partner handle the finances completely

“It’s so common for women to outsource the finances to their partners. It often happens around the time they have small children, and then doesn’t shift back. In some ways it can even feel like a fair division of labor if she is handling many other aspects of domestic life. And while you don’t need to take over the finances, you do need to understand your financial position. So start asking questions and get a clear picture of your assets – this is your bank balance, super, investments and shares, and then your debts, which includes your home loan, any investment loans and credit card debt.”

Women have a history of taking a backseat when it comes to finances, and this doesn’t always serve us well.

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They feel like they can’t move the goal posts in their relationship

“Oftentimes, at the beginning of a relationship, we don’t talk about money. Even when we start a family, we don’t always talk about money. But there comes a time in your life where you decide you want more information, and when that happens, you are entitled to make changes. Just because you might not have been across the details before, does not mean you cannot start now.”

They don’t ask enough questions

“Financial talk can be wrapped up in numbers and terms that aren’t always easy to understand. And women are often shy of asking for explanations – but there are no silly questions. The numbers can be confusing but will become much easier to understand once explained. Many women haven’t grown up with their parents discussing financial matters with them, so oftentimes it comes down as much to social conditioning as anything else.”

They don’t ever consider their spending habits

“Something we all need to do is consider how we spend money. It often has a lot to do with how you were raised among other things, but if you are spending more than you make on a regular basis, you just will not accumulate wealth. One thing that can really motivate positive change in spending behaviors is starting to consider what you want in 5, 10, 15 years. Then work back, and figure out what is worth sacrificing now to get what you want down the track.”

How you spend money could be negatively affecting your financial health.

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They don’t factor plan for their long-term future

“Women are excellent at holding space for the goals of everyone else in their life, but often won’t be thinking about their own long-term future. There are important questions worth asking: Where do you want to be when you’re 60? How do you envision your life in your 70s? This is especially important when it comes to super. For women who left the workforce and have not been contributing to their super fund, it’s important to consider your plans. It’s not too late to start making voluntary contributions.”

They think they have to “know everything” to invest

“Women tend to lack confidence when it comes to investing, but the fundamentals are simple: don’t spend everything you earn. Instead, save some and invest it for future you. And since your money doesn’t do anything in a bank account, putting it into a super fund or investing it in shares means you’ll have passive income in retirement. For some women, the struggle is getting comfortable with that feeling of taking risk. But in many ways that makes women more savvy investors, because they ask great questions and look for long-term solutions.”

They don’t ask for help

“If you’re at a loss of what to do about your financial future, a financial planner can help. The industry has really been cleaned up and this is not just for wealthy people. A financial planner can help anyone who wants to look ahead and put some structure around their plans. And these conversations can help work through your goals and unpack issues you might have around investing or spending.”

Brought To You By La Trobe Financial.