Women and Money: The Top Mistakes and How to Avoid Them
Sun, 11/11/2012 - 8:54pm | by Guest Contributor
Women and men are not so terribly different when it comes to the things they want out of life: love, comfort, food on the table and a roof over their heads. But when it comes to spending money, the sexes seem to have vastly different ideas about how it should be spent. This is not to say that one gender is more responsible than another, it’s just that they diverge on the point of what is worthy of spending disposable income on.
For men it might be items like motorcycles, video games, and fun vacations, whereas women might opt for shoes (fess up, girls) and home goods. Of course, this is a vastly simplified accounting of spending preferences, but you get the idea; men and women can often disagree about how money should be spent. And in truth, these differences could simply be chalked up to spheres of interest and the way males and females are raised in our culture. But often, women find themselves ill-prepared to deal with important money matters, and that can lead to major mistakes. Here are a couple you’ll want to avoid.
The main mistake that women (and men, for that matter) make is not saving for the future. Sure you’ve got a 401K, but these days it’s just not enough. You’re going to need to supplement your retirement fund if you want to live in the same style as you do when working, which means arranging other investments. If you have extra income, you should seriously consider making a monthly contribution to a Roth IRA, and the earlier you start the better. The great thing about this type of account is that it acts like a 401K. Even though you put in money after taxation, it is considered pre-taxable income, which means you’ll get a write-off on your taxes when you file. In addition, you will get the benefits of compound interest, meaning your money will grow faster than in other types of accounts.
Another problem that many women face is the conundrum of how to invest. The world of stocks and bonds can be a frightening place if you don’t know what you’re doing, and with all the scandals involving companies that abscond with their investor’s funds (Madoff), you might not know who to trust with your seed money. However, there are quite a few ways that you can safely tuck your money away and get it working for you. One fantastic investment is real estate. Even though the market is bad right now, the truth is that real estate will always rebound because homes are always going to be in demand. So if you can hang onto a house long enough to ride out dips in the market, you’re going to make back what you spent and more.
And of course, developing a diverse portfolio is another good way to see your money grow, as long as you take the time to learn about how money-market investments work and keep a close eye on whomever you choose to manage your investment funds.