Over the past fifteen years I’ve had the pleasure of working with many smart and capable professional women. I’ve spoken with even more about their finances. Here are the biggest mistakes I’ve seen these smart women make with their money.
#1: Not showing up
By far the biggest mistake many women make with their money is simply not paying attention to it in the first place. They may say they’re too busy, that they find topics like taxes and investing confusing, or that they’re “just not good at math.” Whatever the excuse, the result is an abdication of responsibility for their own financial lives.
One woman I spoke with admitted that she hadn’t looked at her own investment account statements in over ten years. When she finally did, she was predictably shocked at what she found. But of course those ten years of opportunity were gone, and no amount of work and good advice on my part could ever bring them back.
Other women are happy to delegate virtually all money decisions to the man in their life — until they find themselves contemplating a breakup. Then they panic and may end up making decisions that they will later regret.
If you’ve been avoiding your money, you have many options to become engaged. Find yourself a good advisor (see below). Join or start a Money Support Group. Ask your friends for their favorite book(s) about money. It may be difficult to change, but just remember: 90% of success is simply showing up.
#2: Avoiding the discomfort of understanding your own feelings about money
Money is a very emotional topic. In fact, understanding how we truly think and feel about money is just as important as understanding the nuts-and-bolts workings of financial markets or the tax code – and in many ways much more complex. But very few of us have the courage or make the effort to come to terms with how we emotionally process money topics. And if we don’t understand how emotions mess with our financial decision making, we tend to make bad financial decisions.
If you are avoiding your money, do you know why? Is it because someone told you that it was “unfeminine” to manage money? Or did you grow up in a household where money was the cause of friction and unhappiness, and decided you wanted to have as little as possible to do with it as an adult?
Whatever your feelings about money – and I guarantee that you have them, because we all do – if you fail to understand those emotions you will be doomed to unthinkingly following emotional tropes from your past that probably aren’t going to be helpful in your present. Once you have processed and understand your financial experiences, however, you will be free to make financial decisions that suit your present and will serve your future.
#3: Reluctance to build the right kind of support system
I am always amazed when capable, professional women say things to me like “I know I really ought to be able to do all of this financial stuff myself.” Really? Why? I don’t know a thing about plumbing and have never felt guilty about calling a plumber when I need one. Few of us suffer pangs of guilt because we consult a doctor when we’re sick. Why then do so many people feel like they ‘ought to be’ expert in all kinds of technical financial matters?
Taking high-level responsibility for one’s financial decisions is one thing; but no one should assume that she has to manage every technical aspect of her financial life alone and unaided. As a manager in business, you build a capable team of people to help accomplish your corporate goals. Why should it be any different when it comes to your personal finances? Find people you trust and let them work as a team to help you – with you as the ultimate decision maker.
#4: Assuming that Mom & Dad will always be the way they were
Like it or not, women continue to be the primary caregivers in their families. This is even more true for eldercare situations than it is for child care. And when aging parents need help, it is their daughters who bear the brunt of the effort. According to the latest survey of the National Alliance for Caregiving, 32% of women either turn down a promotion, quit their jobs or retire early, or take an extended leave of absence in order to care for their aging parents. An overwhelming 62% have to adjust their working schedules in order to accommodate family needs.
Such circumstances will have an impact on your career and your finances, not to mention your stress levels. There’s nothing you can do about your parents’ aging process, of course, but there are things you can do to prepare and to minimize both the emotional and financial stress that you’ll experience. First, talk to your parents before the inevitable crisis hits. Warn them about scammers who target seniors. Offer to get them help managing their money so that they can be self-supporting for as long as possible. Make sure that their estate planning documents are in order. Talk to your siblings about how you’ll want to cooperate in addressing any needs that may arise.
Your willingness to simply acknowledge that this will be a fact of your life at some point is helpful. You may even be able to adjust your career to allow for more flexibility at some point. At the very least, be aware that there are support groups and community resources that are available to help, and don’t hesitate to reach out to them.
#5: Failing to plan for a very long life
Women, in general, live longer than men. Yet many of my women clients say things like “We don’t have to plan for me beyond the age of 74. That’s when my Dad died.” Of course if any of us knew exactly how long we needed to plan for, many things would be much simpler. But we don’t, and so we must work with possibilities and probabilities. Unless you currently suffer from a specific illness or medical condition that is statistically likely to shorten your life span, it’s prudent for you to plan for a life span well into your 90s. It is also wise for you to plan on losing your husband or partner before you, and on needing additional support during the last period of your life.
In some ways talking about our final months and years is more difficult that talking about death. None of us wants to envision ourselves as ‘old’ and otherwise less than we currently are. Ironically, many women first truly understand that doing so is a gift to their loved ones as well as to themselves only after having lived through the last years of their parents (see above). But a gift it is, and one that will allow your own children and other loved ones to remember you for the wonderful, competent, and caring person that you are.
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It’s not too late to start paying attention to your finances, to resolving your difficult or negative feeling about money, and to building a support system that will enable you to delegate the technical details. It takes some determination and some effort, but it’s well worth it if you want to live a life without financial worry and focused on the things, and people, you love most.
September 6, 2016