Financial Mistakes
Women Must Avoid

Financial mistakes can prove to be costly, and it’s no different for women. Given their multiple roles and the fact that they sacrifice their careers, more often than not, for family responsibilities, it’s imperative for them to be in command of their finances.

Avoiding these mistakes ensure that you, as a woman, secure your future and make money work for you. So, what are they? Let’s find out.

Letting Your Partner Manage Money

This is perhaps one of the most common mistakes committed by most women, even those who are earning. They allow their partners to manage money and leave every monetary decision to them. As a result, they have little or no experience in handling investments, should the need arise in the future.

While it’s good that you trust your partner, it’s equally vital for you to take active participation in monetary matters. Have a joint account, and make sure you know where your partner is investing your money. Also, don’t shy from asking questions regarding monetary decisions that directly or indirectly impact your future.

Understand the responsibilities that you need to shoulder should you agree to become a guarantor or co-borrower for loans.

Lack of Knowledge about Financial Instruments

Several financial mistakes emanate from the lack of adequate knowledge regarding financial instruments. You must realise that every asset class has a different structure and serves a specific purpose. Also, the risk associated with each is different.

Only when you have clarity on how a financial instrument operates will you be able to make the right calls. For example, while a bank fixed deposit is latent to market volatility, equities carry a higher risk element. On the other hand, the quantum of risk is low for debt instruments, though they are not entirely risk-free.

While a bank FD can be a prudent choice for accumulating a corpus for short-term goals like going on a holiday and buying a car, among others, equities can help build funds for objectives such as children’s higher education and retirement. Ample material is available over the web reading which can help you know the nitty-gritty of various financial tools.

Saving instead of Investing

While women are habitual savers, it’s equally essential to invest the money to make it work. If you happen to take a career break to raise a family, investments made over the years can help you be on a solid footing.

Investments help grow your money and address extra expenses coming your way. Depending on your risk appetite, you can start investing in either fixed-return instruments such as a bank recurring deposit or market-linked products such as mutual funds via systematic investment plans (SIPs).

Not having an Emergency Fund

Life is full of surprises, and an emergency can strike anytime. The COVID-19 pandemic has shown how things can radically change in quick time. A job loss, medical contingency, or break down in relationship with your partner can derail your financial plan in no time.

For such rainy days, an emergency fund can be godsend. Therefore, it’s vital to build it through dedicated and planned investments. Ensure that the emergency corpus is large enough to sustain you until things stabilise.

A vital thing to take into consideration is the ease of access to funds. In other words, make sure that you can easily liquidate your investments in times of need.

Delaying Plans for Retirement

It’s a misconception that retirement planning is meant only for men. You, too, need to plan your retirement well in advance to ensure you live life on your terms and conditions once you’ve taken care of your major responsibilities.

You must start planning for your retirement as early as possible and probably from day one you start earning. Having the funds in your golden years will make sure you can tackle any financial constraint with utmost ease.

Conclusion

Avoiding these mistakes will help you be prudent with your money and make sure you are prepared to handle any contingency, no matter how big it is, without fretting. It will set you on your path to financial freedom.

Source: Nuvamawealth.com