Women and Men both make Financial Planning mistakes! Here are a few mistakes that we've observed as peculiar to Women in our experience. If you catch yourself saying "this sounds like something I do!" it might be worthwhile to take a pause and retrace your steps.
Letting your husband manage the money without your involvementIt's both your right and duty to be involved in your family's financial nitty-gritties, irrespective of whether you're contributing to the inflows. Very few Women actually assume that they'll ever encounter a divorce (or the death of a spouse) but this would be a mistake. The last thing you want is for financial shocks to aggravate an already terrible situation.
Not taking your potentially higher lifespan into accountWhile working out your family's Financial Plan, did you take into account that you'll likely outlive your husband by 6-8 years? Most women fail to do so. To make matters worse, the money requirement in those remaining years is likely to be insanely high, what with long term inflation averaging 7%. What costs 50,000 per month today will quite possibly cost 380,000 per month or so after 30 years. Don't miss factoring in those extra years!
Being too risk averse… or not understanding riskIt's a fact that more women investors tend towards more risk aversion than men. This is ironic when you consider that the average woman will outlive the average man, and the longer time horizon may actually make a case for a higher exposure to more volatile growth assets (such as equity mutual funds)! We've observed many women investors shutting themselves off from risky assets altogether in the name of being 'conservative', and winding up with greatly compromised returns in the long term as a result. Rather, it would be wise to make an effort to understand risk and how it can lead to significantly higher growth if managed prudently.
Being frightened by jargonWe've observed many Women being so 'jargon averse' that the mere sight of those complex sounding phrases jumping at them from policy documents, investment proposals and mutual fund forms propels them into 'avoidance' mode. Truthfully speaking, nothing related to personal finance is quite as complex as it seems. When confronted by the jargon monster the next time, breathe deeply at first! Then, politely ask your Investment Advisor to explain the matter at hand in laypersons terms. Research has indicated that women shy away from asking questions related to financial terms, and end up not investing their money as a result. Don't be shy of asking questions till you have 100 per cent clarity.
Procrastinating investment decisionsProcrastination or putting off important financial decisions might just be the No. 1 enemy of your Financial Goals! In our observation, many Women tend to put off money decisions for a later date due to the fear of making a mistake. Working with a trustworthy advisor or taking time out to self-educate on matters related to personal finance will go a long way in helping you nip this dangerous tendency in the bud.