Today's post is in honor of National Women's Money Week which brings together brings together the best and brightest in personal finance at the beginning of every January to discuss money issues as they uniquely relate to women. It's about taking control of your finances and reshaping your financial future. Enjoy!
As women prioritizing our finances is very important to ensure we can take care of ourselves and our families over the long term. Gone are the days when it was ok to rely on a pension, spouse or the government for long term financial security.
In this day and age, given the fact that most companies do not provide pensions, the divorce rate is 50% and there is no guarantee of a social security check in the future, it’s necessary to take your financial well being into your own hands.
Below are 4 financial pitfalls you should avoid when it comes to your money.
4 Financial Pitfalls Every Woman needs to avoid
Pitfall #1: Not actively monitoring your income and expenses
Monitoring your income and expenses is essential to ensure that you are not spending more than you earn and also ensures you are able to allocate money towards your goals such as saving and paying off debt. The best way to monitor things is by creating a budget in advance of every month to so you are aware of what bills are coming up and how much you have left to save, invest and pay off debt.
If you've ever wondered where you money is going, or you find yourself struggling to get to the end of the month financially, then this is something you want to start doing ASAP.
Pitfall #2: Overspending
A lot of times, you probably don't realize if you are overspending until you actually check your credit card or bank statements or until you find yourself short of money. Even with a budget, overspending still occurs and the biggest problem with overspending is that it derails your goals of savings and debt reduction. So how can you curb it?
Start by tracking your spending in a detailed way - one way to do this is by keeping a spending journal where you write down every transaction you make every day for 30 days (reviewing your spending each evening). This exercise will not only show you trends of where you money is going but it will keep you conscious of how and when you are spending.
In order to build wealth and actually accomplish your money goals, you have to keep your spending under control.
Pitfall #3: Ignoring long term savings
One of the biggest money mistakes women can make is assuming they have time or waiting till they get married or till they have kids or earn more etc before they start saving for retirement.
This is a big mistake! Time is your biggest asset when it comes to accomplishing your financial goals and once it's gone you can't get it back. Time allows you to take advantage of compound interest and small contributions to your retirement plan or long term accounts over time can equal big savings.
It's important to start saving and investing for the longer term as soon as you can. The earlier you can start the better.
Pitfall #4: Not having an emergency fund
The important of having an emergency cannot be stressed enough. An emergency fund can help your weather unplanned life circumstances and emergencies which in turn can help you avoid having to take on (additional) debt while you get through the situation. Not having an emergency fund can completely derail your financial goals if an emergency does come up and you need funds to cover it but don't have any put away.
It's a good idea to set an initial goal of $1,00 if you don't already have one and if you do have one, then your goal should be to get it to 3 months and then 6 months of your basic living expenses.
Avoid these 4 financial pitfalls and you'll be on your way to succeeding with your money. They are not difficult to implement and making small adjustments in your current financial behavior can make all the difference!
Bola Onada Sokunbi
If you are ready to get your finances in order now, The Clever Girl Finance Accountability program is a great place to start!