Mistakes are an inevitable part of life, we’ve all made them, and most likely will continue to as long as the demands of life push and pull us in unmanageable directions. Money poses its own unique set of challenges. Here are some of the most common money mistakes smart women make and what we can do to correct them.
by Lori Brand of SafeChoice Financal Group
1) Doing nothing at all.
Let’s face it, we’re all busy. There’s work, pta, kids activities, housework, grocery shopping and the list goes on. “I’ll start tomorrow” is your mantra, and the next thing you know, you’ve lost 15 years of getting yourself on sound financial footing. Make a commitment TODAY to start planning your financial future, no matter how small a step it may be.
2) Deferring to someone else
It’s easy to want to put off the less- than- desirable task of managing money to a spouse, significant other or a parent. But things happen such as divorce, or death. No one plans for it, no one wants it, so don’t find yourself trying to figure out your finances when you’re in the throes of a life event. If you do leave the planning to your spouse, insist on being part of it and ask questions. It’s your money too!
3) Direct deposit in checking accounts instead of savings accounts.
Once your paycheck goes into your checking account all bets are off as we swipe away for groceries, meals, movie tickets, drug store purchases, sneakers etc. From that same account we pay bills and then inevitably fall into the trap that says “I don’t have enough money to invest,” so we don’t. We’ve tricked ourselves into the mental mindset that says “wealth building is for other people.” We completely bypass the road to wealth without even realizing it. A better plan is to direct your paycheck into a savings account and take what you need to pay bills.
After that, take out another amount to be used for incidentals such as movies, dining out. etc. Once you switch up and see your savings grow, you’ll be less eager to move it out for frivolous purchases.
4) Not seeking the services of a financial advisor.
There is a common (though outdated ) misconception that that says you must already have a lot of money to seek out the services of a financial advisor right? Wrong! Think intimidating, stodgy men in blue pinstripes and a mahogany desk? Not anymore. A good financial advisor will sit down with you for free, and get you on a financial path whether you have $20, or $ 200, 000 dollars. See someone and GET STARTED. There are too many plans, products and services on the market today not to take advantage of something.
5) Not using your 401-k.
Using an employer – sponsored retirement plan is a basic cornerstone of sound financial planning. You pick an amount of money you want to save, it comes out of your check automatically and you pay less tax to Uncle Sam. You don’t see, it feel it, or miss it and you’re beginning to see your savings grow. If you don’t have access to a 401-k, there are other tax savings alternatives you can use such as a traditional IRA, or ROTH IRA. See an advisor today and get started on a plan that’s comfortable for you.
6) Not reading or educating yourself about money
No one says you have To Read Barrons or the Wall Street Journal, but there is a plethora of easily- digestible information available in both print and digital format with regard to money. Dailyworth, or the Huffington Post are two digital blogs that feature money sections, often written with a human interest slant. The idea is to expand your mind in the right direction and start to build your financial confidence.
7) Thinking that life Insurance only pays at death.
Another cornerstone of sound financial planning is Life Insurance, but most think of it as your grandfather’s life insurance policy that only pays out to a single beneficiary at death…. not true anymore! Today’s life insurance products are hard working multi-taskers that can take care of several important components of a sound financial plan, all with one single contribution.
Worth looking into, particularly if you have limited resources to throw toward your financial goals at the moment.
8) Not paying yourself first.
You’ve committed to the idea of saving money and each month. after bills and expenses, you try to put some money away. Your results are disappointing and money is growing at a snail’s pace. More often than not, you never execute the transfer because there’s too much “month at the end of your money.” A better plan is to “make it automatic” . Sign up for a monthly automatic investment plan and after awhile you won’t miss the deduction. When you’ve accumulated enough money, check in with a financial advisor for recommendations on mutual funds, or ETF’s ( exchange traded funds.)
9) Telling yourself you “don’t understand money”.
So here’s the painful truth. If you tell yourself that you “don’t understand” money, then the self-fulfilling prophecy of those words will never lead you on a path to financial security, no matter how badly you may want it. Our thoughts are powerful triggers which lead us to action, and not understanding money is like writing yourself a hall pass for a lifetime of lackluster, and compromised financial security. A better plan is to simply change your thoughts and try something like this; “each day, I will take one positive step to learn more about securing my financial future. “ Positive words reap positive results.
10. Telling yourself you don’t have Time to Learn about money (and being okay with it)
Truth: Warren Buffett and Bill Gates all have the same 24 hours in a day that you do. If you don’t’ have time to learn about money, it’s because you’ve chosen not to make it a priority — but that’s ok.!!. Just know you may be compromising your financial future to someone else or completely by passing it altogether, neither of which is ok. A better plan is to understand that in your busy day, learning the intricacies of executing a sound financial plan may not be in your wheelhouse, but you have options to get you on a sound financial plan, even if only baby steps. Just start! You’ll be glad you did!!
About the Author Lori Brand
Lori Brand one of the founders of Connect the Dots 4 Woman and is a financial advisor at SafeChoice Financial Group www.SafeChoiceFinancialGroup.com. She specializes in helping people that have experienced a major BLIP in their personal or professional life and feel like they are starting over again. You can hear Lori speak about changing your money mindset at our networking events information sessions.