Five Financial Mistakes Every Woman Must Avoid
Women tend to neglect their own financial needs, which could turn out to be a costly mistake later
Mothers, who invest a lot of effort in disciplining and correcting their children, do not often apply that rule to themselves. Busy as they are with ensuring the best for their children, they often forget to spend time looking after their own interests, especially financial, only to regret it later.
If you want to steer clear of such situations, make sure you avoid these five mistakes that women are prone to making:
- Being entirely dependent on spouse
Whether you are a home-maker or a working woman, you should not leave financial decisions entirely to your spouse. Go beyond merely managing the monthly household budget. "You must take an active interest in monitoring the financial assets of the family. You must find out where they are being invested as you have the equal right to be informed. You constitute one of the wheels of the family and if one of them is in the dark, the vehicle will not run efficiently," reasons financial planner Kavitha Menon. Make sure you review the family's portfolio regularly. "Many just vaguely know how their money is deployed. Do not become just a joint signatory to investments. Understand the rights and liabilities that go into joint accounts. Many are not even aware of the bank details like log in details and password. This can create hurdles in an emergency," explains financial planner Tejal Gandhi.
- Not creating individual assets
Cultural conditioning as well as circumstances push many women to put family's interests over self, leaving them devoid of assets that are entirely their own. Make sure you do not commit similar mistakes. "Even those who hail from well-off families need to create their own assets. Some end up splurging their family or own income only to regret later," says Menon. Some double income couples tend to split financial responsibilities, with one of them discharging the EMIs, while the other takes care of the household expenses. If your husband is managing EMIs, ensure that you have a share in the property.
- Being paranoid about numbers
Despite financial planners regarding women as better money managers, it is not uncommon to see women baulking at the thought of getting involved with the math of financial planning. "Somewhere, at the back of their mind, it is ingrained in a lot of women. They simply do not want to talk about money matters and figures. 'Numbers are not for me' is a misconception they need to get rid off," says Gandhi.
- Extreme risk aversion
It is natural to feel comfortable with simple-to-understand, safe investments like fixed deposits. "They lose out on higher returns while trying to be safe. While FDs are easier to manage, their utility is limited when it comes to growing wealth," says Menon. Since women are regarded as better risk managers and patient investors, long-term equity investment strategy could, in fact, be better suited for them.
- Focusing on children, ignoring their own retirement
The primary goal of parents once they have children is to ensure the best quality education for them throughout their student years. "I always advise my clients to plan for their own retirement too. What if the child pursues a course that does not necessitate a lot of funds? What if she starts working and is in a position to fund own education? Besides, you can take an education loan for the purpose, but remember there are no loans available for retirement," points out Menon.