One of my favorite things about my job as a financial advisor is working with successful women who are serious about understanding their money and what it should be doing for them. I’ve learned that women approach money and financial strategy in a different way than men. But the all-important corollary to that is that each woman is an individual with distinct needs and goals. Unlike golf clubs, there’s no such thing as a “women’s financial plan.”
There are, however, some common traps that executive women tend to fall into regarding their financial planning. There are also some smart ways to make sure they are getting the most from their asset management plan. Let’s take a look at a couple of each.
Trap #1: Wrong career assumptions.
It’s pretty typical for a male-oriented financial plan to assume a steadily growing income stream all the way to retirement and possibly beyond. But for professional women, who are statistically much more likely than men to take on the major responsibility for child or elder care, leaving the workforce for just five years to raise children can knock as much as 20% off their lifetime earning potential. Any financial plan for a professional woman that doesn’t take into account the likelihood of some years of less than peak-capacity earnings is unrealistic.
Tip #1: Asking all the questions.
Women are much more likely than men to have questions about aspects of any investment or financial planning strategy. But too often, they fail to ask. Women seeking financial planning or investment advice should absolutely ask about whatever they need to know, and if the advisor gives an off-the-cuff or unsatisfying response, they should end the interview and find another advisor.
Trap #2: Not seeing the goal.
Especially for women, who tend to spend more time considering how their decisions will affect the important people in their lives, it can be tough to have a clear focus on specific financial goals and priorities. Many more women than men are balancing careers with children, for example, and this can make it hard to properly prioritize their own financial well-being. In these situations, it’s important to remember that the number-one way to benefit your children’s financial and emotional future is to ensure that they don’t have to provide for you in your later years. Taking care of your financial future is really an act of caring.
Tip #2: To save and invest better, budget better.
Sometimes money can be more an emotional prop than a tool for the future. The “urge to splurge” has derailed many a financial plan. To counteract this tendency, I urge all my clients to get in the saving habit by using good budgeting tools. I love Mint.com because it is free, easy, quick, and convenient. It will help you see where your money is going and where you could find those extra dollars to save and invest. And there are other free online tools, too. The point is, any financial plan is only as good as its implementation, and nothing helps you stay on track better than consistent budgeting.
I specialize in helping up-and-coming women, women in transition, and others with developing and implementing financial plans based on sound research and their own unique goals and priorities. Are you ready to chart your course toward financial security? Click here to contact me today.
Stay Diversified, Stay YOUR Course!