What are some of the most common financial mistakes women make, and how can I avoid them?

Mistake #1:  Relying on Someone Else To Manage Your Finances

Life can get crazy, and sometimes without realizing it, you have handed over the purse strings.  By not engaging in the family finances, women set themselves up for potential hardships.  When one spouse controls the finances, the other spouse can be left in a vulnerable position (especially if the marriage ends).  This can also lead to losing your financial identity.  Merged accounts and shared credit cards in your significant others name may lead to lack of an active credit history.

Solution:  Attend meetings together.  Joint investments or property should be held in both names.  Make a list of all bank and brokerage accounts and insurance policies and keep it with other important documents, such as wills.  Maintain some individual accounts.  Yours, mine, and ours will allow for each to maintain credit identity.

Mistake #2: Not Saving and Investing Enough

Outliving your retirement income is one of the biggest risks any retiree faces, especially women.  According to the National Center of Health Statistics, a woman who reaches age 65 can expect to live until at least age 85. However, because women typically spend less time in the workforce (and may earn less for the same work than their male counterparts), women’s retirement savings and benefits are often shortchanged.

Solution:  Be diligent with your contributions.  Resist the urge to cut back on retirement saving to meet other expenses or accommodate other goals.

• Increase contributions to your Simplified Employee Pension (SEP), SIMPLE or company 401(k) plan.
• Annually review and adjust your saving and investing goals and managing your asset allocation to stay aligned with your long-term goals, even during periods of market uncertainty.
• Consider consolidating your retirement plan accounts from previous employers, making it easier to track and manage your investments

Mistake #3: Underestimating Your Need for Insurance

On average, women outlive men by 7 years (mortality for women is 79 years vs. 72 for men).  Many women are faced with caring for their husbands later in life, but after his death they may be left with no one to care for them. Because of this, women’s health care needs will likely be substantially higher than men, making it much more expensive for us to live longer.   What does this mean?  It means we may not only need to consider products like Long-Term Care Insurance, but we also need to have much more money in the retirement pot than men in order to not outlive our funds.

Solution:  Research your options regarding insurance.  Long-Term Care Insurance helps cover the cost of care you may need.  It gives you the flexibility to participate in making choices that impact your care, about the services you receive, where you receive them and who provides the care.  Life insurance can’t protect your family from losing you, but may help your family financially should you die early. This applies whether you are the primary wage earner or not. 

*Do you have a personal finance question for Jean? Click Here to submit a question via email for her to answer in the next posting.

Jean B. Muldowney, Financial Advisor, Wells Fargo Advisors, LLC, Member SIPC

As a Financial Advisor, I am dedicated to developing financial and investment strategies that are in line with your needs and goals. Making sure your wealth continues to work in support of the goals you have established takes careful planning. Such preparation is not a single event – it is a process. Backed by the vast resources of Wells Fargo Advisors, I focus on delivering personal service that surpasses client expectations. I hold all the requisite securities registrations and insurance licenses as well as a Bachelor of Arts degree in Communications from John Carroll University, Cleveland, Ohio. I take pride in working for a firm that puts you first.

 Question:

“Each January, I set personal goals for myself. With everything going on in the economy, what are some New Year’s financial resolutions that I should consider?”

 Answer:

Every year lists are created, promises are made, and we start out with the best intentions.  Week one is outstanding, week two is going great, week three needs a pep talk, and let’s face it…..at week four we have issues.   Sometimes it’s a matter of setting unrealistic objectives. When it comes to financial resolutions, some small goals can yield some amazing results.  Begin with this:

• Clarify Goals  Many women don’t begin to plan for retirement because they have not set any long-term personal goals.  You wouldn’t set out on a trip without first having a destination in mind, right?  Steps you take should be based on what you are trying to accomplish.  For instance, if you want to retire at 60 to travel, it is necessary to make sure your needs, such as health insurance and living expenses are covered by your retirement income.
• Determine Your “Time Horizon”  Having a clear idea of your goals is important because they will help determine your time horizon. For example, if you want to save for a child’s education, your time horizon will probably be shorter than if you are saving for your retirement.
• Learn One New Thing About Investing This Year  If you want to learn to cook, you read cookbooks. So what can you do when you have a question about finances?  Register for a class, join an investment club, pick up a book or do research from a credible source online.  Your local library or college can also be a great resource.

 Question:

“My colleagues tell me I should save more.  The only problem is I have personal loans that need to be paid off.  Which is more important?  How will I know when its time to change my approach?”

 Answer:

• Establish Your Starting Point  Once you’ve clarified your objectives and time horizon, you need to determine where you are today. In other words, is your financial house currently in order? For example, if you’re carrying a heavy debt burden, especially high-interest credit card debt, you’ll probably need to reduce it before you start investing. A financial advisor can help by evaluating your current financial situation and create a plan-of-action for you.
• Get a Yearly Financial Check-up  Everyone dreads check-ups, but we still go see the doctor every year for our “annual”.  It is very important to review your plan each year.  Over time, it is easy to get off course.  Make sure you evaluate your direction to see if changes are needed to keep on your financial course.

 Do you have a personal finance question for Jean? Click Here to submit a question via email for her to answer in the next posting.

Jean B. Muldowney, Financial Advisor, Wells Fargo Advisors, LLC, Member SIPC

As a Financial Advisor, I am dedicated to developing financial and investment strategies that are in line with your needs and goals. Making sure your wealth continues to work in support of the goals you have established takes careful planning. Such preparation is not a single event – it is a process. Backed by the vast resources of Wells Fargo Advisors, I focus on delivering personal service that surpasses client expectations. I hold all the requisite securities registrations and insurance licenses as well as a Bachelor of Arts degree in Communications from John Carroll University, Cleveland, Ohio. I take pride in working for a firm that puts you first.