Most of the time, you manage your money successfully, handling your day-to-day finances and saving and investing for the future. But nobody’s perfect. Even if you’ve made some of the following money mistakes, there’s plenty you can do to get your finances back on track.
Mistake #1: Ignoring your credit rating
One of the most common mistakes women make is not establishing a solid credit history. Having a good credit history will give you more–and often better–financial options. Lenders will review your credit history when deciding whether to extend you credit. If your credit history is good, you may be offered credit at more advantageous terms, potentially saving you hundreds or even thousands of dollars in interest. And here’s some extra incentive: prospective employers or landlords may check your credit history before offering you a job or renting you a home. Here are some ways you can help keep your credit history healthy:
Mistake #2: Saving for your child’s education–but not your own retirement
As a parent, you may feel it’s your obligation to pay for all or part of your child’s college education, and you may put off saving for retirement until you’ve done so. While it’s natural to want to put your child’s needs first, you don’t want to sacrifice your own financial security. Your children have many options for financing college, and many years to pay for it. On the other hand, you can’t borrow money for retirement, and with a limited number of years to save, it’s hard to make up for lost time. Make saving for retirement your priority, and save for college when your budget allows.
Mistake #3: Underestimating the need for life insurance
Like many women, you may not have enough life insurance. If you’re staying home to raise your family or if you have a part-time job outside the home, you may think that you don’t need it, based on your income. But you’re contributing a lot to your family’s finances, even if you’re not the primary breadwinner. The services you provide for your family are invaluable. If you were to die, would your family members be able to afford college or continue to save for retirement? Would they have enough to cover ordinary living expenses? Life insurance can help protect your family’s finances even after you’re gone.
Mistake #4: Not planning for a long retirement
The good news is that retirement is likely to last 20 to 30 years, but that’s also the bad news–if you’re not prepared. Outliving your retirement income is one of the biggest risks you face. According to recent statistics, a woman who reaches age 65 can expect to live until at least age 85 (with many women living longer). (Source: National Center for Health Statistics, Volume 56, Number 16.) Yet because women typically spend less time in the workforce and may earn less than their male counterparts, their retirement savings and benefits are often shortchanged.
So what can you do to make sure you’ll have enough income to last throughout retirement? Here are some suggestions:
Jason Gilbert is Managing Director of RGA Investment Advisors LLC. He has over 10 years of experience in investment advisory, including portfolio construction, financial strategy, and advanced planning for high-net worth and institutional clients. He maintains an extensive background in both forensic accounting and personal finance, and serves as a fiduciary and trusted partner to his long-standing clients.