Not knowing what to do or not doing are the most common financial mistakes made by women in their 30s, 40s and 50s, according to financial advisor Helen Baker.
She has dedicated her life to helping women make better money and investing decisions, including earning a master’s degree in financial planning and writing books on the subject.
“The most common financial mistakes women make come from a lack of awareness of what they should or should not do,” she told Daily Mail Australia.
“These mistakes, and their ramifications, can vary greatly depending on your life stage…not understanding how your money actually works can be costly.
For women in their 30s, 40s or 50s, there are important financial mistakes to avoid that can be game-changing in the years to come, the Brisbane-based advisor said.
Financial advisor and author Helen Baker has identified the mistakes women need to avoid in their 30s, 40s and 50s. Photo of a woman in her thirties who takes care of her finances
Through her work and study, she has identified the mistakes women need to avoid in what she calls the “naughty 30s”, the “sporty 40s” and the “smart 50s”.
Baker, founder of the women’s finance company On your own two feetsaid that a woman’s thirties are “the time to flirt with her big hopes and dreams, and to implement plans to make them a reality.”
Naughty 30s
The demands of buying a first home, having children and the resulting career break can get in the way of good financial planning, she said.
Common mistakes made by women in their 30s include:
• A lack of guarantees.
• Not investing – losing compound income over your working life.
• Accumulation of bad debts and poor credit rating.
Try instead:
• Protect yourself: build up an emergency fund (easily accessible cash in your own account); buy advantageous insurance while you are young and healthy.
• Invest now: Maximize returns throughout your working life, giving yourself time to recover any unexpected losses. This includes superannuation and other investments.
• Invest in yourself: learn more skills and qualifications to increase your earning potential.
• Control your debts: Spend less than you earn; borrow less than you can afford; quickly pay off bad debt (high-interest debt that does not generate income, such as credit cards).
Sporty 40s
A woman has to be nimble in her 40s, Baker said, “to juggle family needs, work commitments, aging parents and home maintenance,” she said.
“These conflicting demands can easily put your own needs on the back burner.”
Common mistakes in midlife include:
• Abandoning budgets, wealth creation strategies and reviewing spending.
• Adopt bad financial habits, which your children also learn from you.
• Ignoring your own health and well-being.
Try instead:
• Organize regular meetings as a couple/family to discuss money. What comes in? What is happening ? What expenses are no longer necessary (e.g. unused subscriptions/memberships)? How can you get more bang for your buck (e.g., by overhauling utilities, right-sizing insurance, refinancing loans)?
• Regularly review financial and legal issues. Make sure your will is up to date; your supervisor is working well; insurance is fit for purpose and provides adequate coverage; corporate and trust structures are properly set up; you claim all relevant tax deductions and benefits.
• Stay healthy – physically and mentally. This helps reduce your healthcare bills, protects your longer-term health, and preserves your earning capacity (fewer lost work days; better decision-making at work and money).
Helen Baker (pictured) is the founder of women’s financial company On Your Own Two Feet
Pretty 50s
The interesting thing about being in your 50s is that your kids (if you have any) are typically older, you have some seniority on the job and your earning potential is typically at its highest, Baker said.
But she advises women in their 50s not to rest on their laurels.
Common financial mistakes made by women in their 50s include:
• Leave financial matters to your partner. This is why women in their 50s are the new face of homelessness: Divorce or the sudden death of their partner without a backup plan can literally leave them behind.
• Not taking advantage of retirement benefits.
• Not having a transition to a retirement plan.
Try instead:
• Make financial decisions together. Know your individual and joint assets and liabilities; have contingency plans in the event of death/divorce/illness/layoff; get your estate planning in order.
• Benefit from great benefits. Downsizing the family home, spousal and catch-up contributions and low-income offsets can all boost your budget and, in some cases, reduce your tax bill too.
• Develop a retirement plan. Will you both retire together? When? What will your cost of living be? Will you be entitled to a pension/partial pension? How will you spend your days?
A woman is shown reviewing bills and using a calculator to calculate payments.
Baker said that regardless of a woman’s age, a common mistake to avoid is seeking bad financial advice, or even getting none at all.
“Friends and family have good intentions but, unless they are qualified, they offer opinions based on their own situation, not yours,” she said.
“Finfluencers” (financial influencers) and self-proclaimed “experts” generally peddle ideas that benefit them, not you. And DIY financing is risky because you simply don’t know what you don’t know.
She advises people to instead seek qualified professional advice tailored to their unique situation, saying it “may be the best investment you ever make”.
- Helen Baker’s new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women, is available now. Profits from book sales are donated to charities supporting disadvantaged women and children.