Growing up I remember hearing jokes about women and money and I remember watching television shows where women were given an “allowance” by their husbands to buy groceries. The women on these television shows were never seen balancing the checkbook, paying bills or making financial decisions because that was “man’s work”. I still love reruns of I Love Lucy, Leave It To Beaver and Bewitched; however, watching them now in the light of my education and as I have matured, I see how women have fallen prey to an old stereotype — a woman cannot manage money without the help of a man. This is simply not true! However, there are money mistakes that haunt women because of old stereotypes, misconceptions or the simple fact that women are much different from men (and I personally would not change that for any amount of money). Once women learn to recognize these snares, they can avoid them and manage their money as well as any man can.
1. Knowledge = Power = Confidence = Action – Do not be afraid to admit that you need to learn the difference between diversified accounts and hybrid accounts. Just because men may have the Y-chromosome this does not mean men were born with more financial knowledge than women were – – they learned it and so can you. Take classes to learn about financial planning, money management, investing and retirement planning. Seek the advice and counsel of qualified financial planners and learn from them. Once a woman educates herself about finances, it will give her power to feel more confident in managing her money and that creates action that in turn builds her nest egg faster, stronger and bigger.
2. Time to be a Mama Grizzly and Protect Your Cub – Do not let all of your hard work learning good money management skills to build your net worth be for naught by not protecting what you have accumulated. Women should be practical and ready to discuss topics such as prenuptial agreements, wills, trusts and beneficiary designations with their fiancé or significant other. Do not shy away from these topics because of emotions or you may end up with a broken heart and a busted bank account.
3. Saving for your retirement is top priority – It may appear cold and uncaring; however, you should save for your retirement before saving for your children’s college educations, first vehicles, weddings, etc. You will not help your children by ending up penniless when you retire with no means of taking care of yourself. If the decision is between starting a retirement account or an education savings plan, go with the retirement account first. Treat saving for yourself as a monthly bill that must be paid.
4. Never co-sign a debt for anyone – Speaking of your children, they will use your love for them to talk you into co-signing a loan for that brand new vehicle that they just “must” have (they do not need brand new – used is fine). Co-signing a debt is hazardous to your financial security because if the primary obligor defaults you are responsible for the entire debt. Furthermore, late payments also are tied to your credit report!
5. Cultivate your money – Women love, nurture and that take care of their family and friends. This is one of the qualities that make women unique and special – – our capacity to nurture. Women need to use this quality to focus on managing their finances as if it was a new infant. Pour the time, attention and care that you would into a child learning to walk into managing your money so that your finances will continue to grow strong and move in the right direction.
6. Never commit emotional lending – Women do have wonderfully giving natures and can rarely turn away from a plea for help. However, emotional lending will become a drain on your finances. Managing your money means you must sometimes say no to pleas for loans. I admit this is probably one of the hardest money mistakes I have had to overcome because I just cannot tell someone no when they are so desperate. Therefore, before I make a decision to lend money or not, I now force myself to stop and ask myself what will happen if I do not lend the money to them – – will they will lose their home, will their car break down or will they not get the medical attention they need if I do not help them. I have not stopped helping people I just have learned to trust my gut a little more than my heart.
7. Stop emotional shopping – I am lucky that I am not an emotional shopper – I do not shop to feel better. Some women do and this will wreck your budget and deplete your savings. One of the best tips for managing money I have learned is never to go into any store without a list – – having a shopping list and sticking to it reduces impulse spending. Furthermore, remove the temptation to spend money when you are emotional by not going to the store with the intent of “window shopping” to feel better. Window shopping only turns into plastic shopping which is no good for anyone’s budget. Instead of turning to the store when you are feeling the urge to shop, sit down, review your finances and find ways you can save more money.