Everyone makes mistakes with money — it’s part of life. But our little missteps can add up.
Nearly 30 percent of respondents to a TODAY.com survey said they were so nervous about seeking a raise that they couldn't ask. Nearly 40 percent said they had "no idea" what they're doing when it comes to investing. And only 35 percent felt they were on top of managing their money.
For the final part of Her Two Cents TODAY, we’ve rounded up some of the most common money mistakes — and how you can fix them.
MISTAKE No. 1: Underestimating our value
Women doctors at some of the nation’s leading public medical schools earn on average, at least $20,000 less than their colleagues for doing the same work, according to a study published last week in the Journal of the American Medical Association. This is only the latest proof of the persistent wage gap between women and men. On average, women still earn just 79 cents per dollar that men do.
The best thing you can do is to try to close your individual wage gap. To do this, you need to do a little research to see what other people are being paid for the same job that you are doing or applying for, then ask for an equitable offer.
This may seem like a revolutionary idea, but a recent guest on my podcast said that she’s now actively sharing her salary with women in her close orbit. This type of openness is what women need.
MISTAKE No. 2: Letting someone else manage the money
Women play different roles in financial responsibility, according to the latest research from Fidelity’s Couples Retirement Study:
- 24% of women said they are the primary decision maker
- 57% of women said they were joint decision makers with their spouse/partner
- 19% of women said they are not financial decision makers
It's important that both spouses have a grasp on managing their finances, in case of any unexpected events that may occur. The first thing you can do to get on board with managing your money is to understand these things:
- What you earn
- What you own
- What you owe
- Where those assets and liabilities lie
Work with your spouse to manage your finances and pay bills, so you are aware of your financial standing.
Another to note is that it’s important to make sure that you have a retirement account — and that you are managing it. Even if you don't work, you are eligible for a spousal IRA.
MISTAKE No. 3: Not believing in our investment ability
The investment confidence gap between men and women is persistent and large, according to the financial firm SpectrumGroup who has been measuring this issue since 2004.
More women than men consistently say that they’d sit on the investment sidelines and even when they are investing, they're more reluctant to invest in stocks and more likely to put their money in cash.
This is one of those situations where the best solution is to bite the bullet and do it. Investing doesn’t have to be scary or complicated — the trick is to save as much as you can, invest it in a diversified portfolio with a target date retirement fund, which will keep you on track. If you are still hesitant about making investments, set up a meeting with a financial advisor who can help guide you.
MISTAKE No. 4: Putting our kids before ourselves
As a mom, I know it's tough to put yourself first — we always want to help out our kids. We see this not just in our shopping behavior (women buy things for their families more than themselves) but in our desire to save for college before we save for our own retirement and even bail out adult kids.
When it comes to college vs. retirement, if you're not going to prioritize retirement, put some money into a Roth IRA. You can use that money for both retirement and college, so you save now and maybe you'll feel differently about the priorities later.
As far as those adult kids go, there comes a time when you have to turn off the spigot and let them fend for themselves. And if you need a rationale: Know that if you don't take care of yourself now, there will come a time when they will need to likely step in and take care of you (and it will hit when they're trying to put their own kids through college).
MISTAKE No. 5: Indulging in a little too much retail therapy
Shopping isn’t always done out of actual need or want. Emotions come into play and can sometimes cloud our judgement whether to swipe our card or not. According to a survey from Ebates.com, 64 percent of women admit to indulging in this behavior, compared to 40 percent of men.
Before you buy an item, ask yourself these questions:
- Why am I buying this?
- Why am I buying it now?
- What happens if I do buy it?
- What happens if I don't?
After, put the item on hold for 24 hours (or leave it in your cart for the same amount of time if you're online). If you still want the item after your bad day has passed, consider it. Chances are, you’ll change your mind and realize you don’t need it.
If you do decide to make the purchase, without thinking twice, a week later write down how you feel about buying it. Even better, leave the tags on and don’t wear it for a week. If you are feeling buyer’s remorse, you may be able to return it.