The 5 Biggest Money Mistakes Women Make
When it comes to improving finances, saving money and building wealth, there are so many excuses people make as to why they don't do it.
However as women, it is critical for us to get our finances in order for a variety of reasons including the facts that we earn less than men, we spend more time out of the workforce to have / raise children (maternity leave, taking a break from work) which impacts our overall earnings AND we live longer than men which means we need more money over the long term to support ourselves - these are just a few of many reasons.
"There is always some room for improvement when it comes to money."
Whether you have your finances in order, you save a little or you don't save at all, there is always some room for improvement when it comes to money and below are some major money blunders women make when it comes to their finances that you should avoid.
Money Mistake #1: I can't afford to save any money
So many people say that after they've paid their bills, they don't have any money to contribute to their retirement accounts or their emergency fund not to mention of other short or long term goals. However, some of these same people still somehow find money to get their nails done, go out for drinks and dinner and do so much more. A lot of times i'll even hear people say things like "well dinner only cost $20 it doesn't make a difference".
Don't think that $20 matters? Think again. Putting away $20 for one year in a savings account with zero interest will give you $1040 dollars. Imagine if you did that for 5 years? You'd have over $5,000. Imagine if you saved more than $20? Add on some interest and even invest some of that money and we're be talking about potentially much larger savings. So the next time you think that $20 won't make a difference, think again.
Money Mistake #2: Not having a plan to get rid of debt
I like to describe debt as a stumbling block on the path to building wealth and in order to get past it, you need to have a plan to roll (or blast) that block out of your way! It can be very difficult to save money when you are paying back debt and high interest.
However creating and executing a plan to aggressively attack your debt, especially credit card debt, allows you to pay it off as quickly as you can after which you can fully focus on saving more money. You can't build wealth by racking up more debt or by allowing interest payments to sap your income.
Money Mistake #3: I have time, I'll save later
This is one of the biggest misconceptions especially when it comes to money and one of the things people tell themselves that causes them not to take action. Too many people say they have time but instead of taking action they waste so much of the time they have. Days, weeks, months, years go by and no progress is made because they think they still have time.
Time is your greatest asset but only if you use it the right way by making the most of it. Stop waiting to start. Start now. If you can only pay $100 towards your debt today pay it anyway. If you can only save $10 a week, save it anyway. Leverage your time, build the habits and establish the consistency. Wouldn't you rather look back and see progress as opposed to looking back in regret because you wasted so much of your precious time?
Money Mistake #4: I'll figure it out when I get married
I say this time and time again - a man is not a financial plan and neither is planning to marry rich. Life continues after marriage and this means you expenses and financial obligations don't go away. If you can't work on your finances before you get married you won't automatically start doing it when you do.
You should have a plan for your finances before you get married and your partner should have a plan for your finances after you get married as well. It you don't plan, you fail, married or not.
Money Mistake #5: Not having a back up plan
Having a backup plan basically protects you from unplanned life occurrences that cost money. Not only do you need a back up plan, you need a solid one and this includes a fully funded emergency fund (3 to 6 months of basic living expenses) and the right type of insurance (health, auto, life, disability, home etc).
Having these things in place will literally save you when life happens (and it does) and keep your financial plan intact. You'll have a plan to fall back on as opposed to having to leverage debt or loosing all your savings and investments to cover your situation.
Are you making any of these money mistakes above? It's time to work on getting it corrected asap. Already doing all the right things to build wealth? Then it's always a great idea to work on saving even more.
Bola Sokunbi is the founder of Clever Girl Finance and she's passionate about helping women take control of their money so they can live life on their own terms