If women are just as “money savvy” as men, why are there more wealthy men than rich women? Because women make the same money mistakes over and over! Here’s what you need to know about the foolish financial decisions you make – plus ways you can start making good money choices.
The first tip – before we even get into the list of money mistakes and fixes for women – is to start learning what financial terms mean and how easy they are to understand! For example, here’s Suze Orman’s definition of a mutual fund:
“A mutual fund is like a suitcase that holds dozens—and often hundreds—of individual stocks,” says Suze Orman, author of Women & Money: Owning the Power to Control Your Destiny. “If you like what is packed inside the suitcase, then you simply purchase shares of that mutual fund and, voilà, you are the proud owner of a small fraction of each one of the holdings in that suitcase. This gives you instant diversification, even though you bought just one mutual fund.” ― from The Money Book for the Young, Fabulous & Broke.
Learning about mutual funds isn’t just about establishing financial security as a woman…it’s about freedom. My most heartbreaking article is How to Leave Your Husband When You Have No Money because so many women are stuck in unhealthy or abusive relationships simply because they’re financially trapped. So, you need to learn about the money mistakes women make not just to “get rich”, but to be free to make healthy choices in your life and relationships.
If you know you’re bad with money, you’ve taken the most important first step. By understanding your money personality, your financial and other plans for the future, the timeframe you have, and your risk tolerance for investment, you’ll achieve your financial goals faster than you thought possible.
Understanding why you’re bad with money will help you develop a plan, and chances are you’re in better shape than you think. Use these tips for taking control of your personal finances to get where you need to go in life.
7 Money Mistakes Women Make
“Many of the characteristics that make women uniquely feminine are the very same behaviors that prevent them from becoming financially independent,” writes Lois Frankel in Nice Girls Don’t Get Rich. “In many ways the greatest gifts women bring to society are, ironically, the ones that cause them to act in ways counter to their own best interests.”
Being bad with money isn’t an insult to women, nor is it something to be ashamed of. It’s just that some women make the same money mistakes over and over – and it’s because of their feminine nature.
These reasons some women are bad with money are from financial expert and author, Lois Frankel. Read her book for the full explanations and theories – the link is at the end of the article.
1. Not separating money and love
Many women like to rescue people in different ways – and finances are one way. If someone asks to borrow money, many women lend it freely – to their own detriment. I watch Judge Marilyn Milian almost every day, and it’s almost always women suing men they love for non-payment of financial loans. A mistake women make with money is letting their relationship and love affect their financial decisions.
If someone you care about needs or asks for money, find different want to help him – other than giving or loaning money! Help with resume writing, help with networking, cook dinner, babysit, help with paperwork. If you lend money, always write up a contract. Learn how to stop sacrificing your own future to take care of the needs or wants of others.
One of my most popular money articles is 6 Things to Consider Before Lending Money to Your Adult Child.
2. Not negotiating before buying big or little things
“Women don’t get as much as men because they don’t ask for it, and they don’t ask because negotiations make them nervous,” writes Frankel. Men think of negotiation as fun and exciting; women view it as scary. This doesn’t mean women are “bad” with money; it means they don’t get as much bang for their buck.
What’s your next major purchase or financial transaction? Prepare in advance, whether you’re dealing with a car salesman, a raise at work, or the amount of money you and your husband should spend on your next vacation.
3. Not getting contracts, loan agreements, or purchase agreements in writing
Another mistake women make with money is failing to get a contract that stipulates the details of a sale, job offer, divorce settlement, family property division, or service contract. If you’re bad with money, maybe it’s because you don’t treat your purchases or financial transactions in a business-like manner.
Make sure every financial transaction you do is in writing, signed by all parties. Keep your finances organized with file folders for your receipts, contracts, financial agreements, payments, etc.
4. Not working towards financial independence
“If you’re not accumulating the amount of money you need to be financially independent, ask yourself why,” writes Frankel in Nice Girls Don’t Get Rich. “Are you better at playing the role of ‘nice girl’ than you are at playing the financial game?”
Men are willing to win at all costs. “Playing like a girl” is a money mistake women make. There’s nothing wrong, illegal, or immoral about walking away with a lot of money!
If you’re so bad with money you don’t know what financial independence is, read 5 Signs of a Financially Independent Woman.
5. Allowing let social pressure influence financial decisions
“One of the biggest mistakes I’ve made around money is allowing myself to be bullied into contributing to group gifts at an expense greater than I wanted to spend,” writes Frankel.
Social pressure can cause us to spend more than we have. For instance, buying a $100 gift for a baby shower because you know others will spend that amount of money can lead you to spend 10 times as much as you would have. This can make women bad with money because it influences their financial decisions.
6. Not choosing financial planners carefully – or at all!
Not hiring a financial planner is a money mistake women make. But so is trusting the wrong person with your investments is a money mistake women often make, and it can devastate them financially. Don’t blindly trust anyone – a partner, husband, child, relative, or your best friend’s stock broker – to take care of your investment portfolio. When you’re interviewing potential investment brokers, ask for a free consultation, review their charges, and select someone with a broad base of knowledge.
Read 10 Things You Need to Know Before Hiring a Financial Planner.
7. Not talking to financially successful or wealthy women
The final money mistake women make is striving to survive – not to be wealthy or amass financial security.
Frankel encourages women to visualize being surrounded by money, and not focus on being poor or broke. To stop being bad with money, picture yourself not just paying off your Visa bill, but actually having money left over to invest in yourself, your portfolio, or your kids.
Keep learning about how to fix the most common money mistakes make! And, go past surviving to actually thriving as a successful woman. Read books such as Lois Frankel’s Nice Girls Don’t Get the Corner Office: Unconscious Mistakes Women Make That Sabotage Their Careers.
If you aren’t good with money because you don’t earn enough, you might want to read How to Earn Extra Money Blogging. In that article, I share how I make money as a blogger. I’m not a woman who is bad with money – especially since I’ve learned how to earn more than $10,000 a year as a writer.
What do you think – are women bad with money? What’s the worst money mistake you ever made? Comments welcome below…