Top 5 Women’s Mistakes in Personal Finance Management

Buying an apartment, because a friend bought the same, cosmetics instead of paying off a loan and other indisputable decisions
Both men and women can make annoying mistakes in managing personal finances. And yet there are mistakes that are peculiar primarily to women.

Small goals prevail over large ones
The small “joys of life” in the female mind often outweigh the really important financial goals. When drawing up a personal financial plan, it happens that the client has a high income, but there are not enough free funds to achieve the desired financial goals. And even after tax, investment, credit optimization, the set goals are still impossible to achieve in the desired time and in full. We have to resort to a thorough analysis of expenses – this is where it turns out what a lot of money a woman spends on the “interface” (clothes, cosmetics, procedures, etc.). With a soft hint that it may not be necessary to buy a subscription to the most expensive fitness center or to relax in only 5-star hotels, the client does not give up. She is not ready to cut back on these costs and switch to cheaper options – even for the most important purposes such as saving for a pension, educating children, paying off a mortgage. For example, a woman can live in a small rented apartment, but at the same time dress in clothes exclusively from the latest fashion collections, relax in the most fashionable hotels, visit luxury spas, buy the most expensive cosmetics – and have savings of only € 1000. My advice in this case is simply to remember that you will want to maintain a comfortable look in 10 years, and in 20, and make savings.

Frequent change of priorities
Proper management of personal finances requires goals with clearly defined deadlines and costs that would not change every month. But when communicating with a number of clients at each meeting, I learn about new goals that often do not coincide with the previous ones or even contradict them. One wants to buy a house in the suburbs in a year, then leave for permanent residence in France in six months, then to acquire a business in Switzerland, and then the idea arises to sell everything and go to live in Bali. It must be remembered that financial instruments are selected to achieve certain goals. If the goals are constantly changing, competently manage finances is unrealistic. My advice: audit goals no more than once a year and change them only with a sharp change in life situation.

Copying financial decisions of colleagues and girlfriends
Women are often influenced by colleagues, friends, environment and tend to copy their financial decisions. Moreover, these decisions may be absolutely not suitable for their financial situation. Say, one lady who does not have loans and debts and also just received an annual bonus tells another about buying spacious apartments in the USA for only $ 50,000, and the second is inspired by the idea to buy exactly the same. Meanwhile, she has an outstanding mortgage at 12% in dollars and after the purchase, in principle, there will be no free funds left. After some time, she has to get into loans to pay for urgent treatment. In fact, it would be more correct for this customer to let part of the accumulated amount to pay off her mortgage in dollars, and leave the rest in the form of a reserve fund for unforeseen expenses. I recommend that my clients remember that each has their own unique situation, and it is necessary to select financial solutions “for oneself”, rather than being guided by fashion.

Caring for everyone but yourself
Many women, in principle, do not have the experience of regular long-term investments for themselves “for the future”. Many save for education for children, for retirement of parents, for a house for the whole family, but they do not have their own “nest egg for the future”, which would be allocated from all other expenses of the family. I believe that any woman should be sure that she will not be left with nothing, no matter what happens in her life. Children will grow up, the marriage may break up, but she certainly must have her own savings by the age of 50-60, which will allow her to live at a decent level, not depend on anyone, including the state. I meet women who, even in their 50s, use all available funds to help their adult children and their children, and at the same time do not have any personal savings. Once again, I want to emphasize that regular deductions of women for themselves are not selfishness, but, on the contrary, concern for their loved ones, which removes the concern for their financial support at a working age.

Refusal of the marriage contract
And one more typical mistake, which, however, is characteristic in general for Russians, women, and men – a rejection of a marriage contract. This is especially important in the case of an unequal marriage, when the future spouses have a different income level, when a man gets significantly more, or, conversely, substantially less than his other half, at marriage.