Not knowing what to do or not to do are the most common money mistakes women in their 30s, 40s and 50s make, according to financial advisor Helen Baker.
She has made it her life’s work to help women make better money and investment decisions, including earning a master’s degree in financial planning and writing books on the subject.
“The most common money mistakes women make stem from a lack of awareness of what to do and what not to do,” she told Daily Mail Australia.
‘These mistakes and their consequences can vary dramatically depending on your stage of life. Not understanding how your money really works can be costly.
For women in their 30s, 40s or 50s, there are key money mistakes to avoid that could be a make-or-break affair for years to come, according to the Brisbane-based adviser.
Financial advisor and author Helen Baker has identified the mistakes women should avoid in their thirties, forties and fifties. The photo shows a woman in her thirties sorting out her finances
As part of her work and study, she has identified the mistakes women should avoid in what she calls the ‘flirty 1930s’, ‘sporty 1940s’ and ‘handy 1950s’.
Baker, the founder of the women’s finance company On their ownsaid that a woman’s thirties are “the time to flirt with your big hopes and dreams, and put plans into action to make them a reality.”
Flirty thirties
The demands of buying a first home, having children and the career break that comes with it can get in the way of good financial planning, she said.
Common mistakes women in their 30s make include:
• A lack of safeguards.
• Not investing – missing out on compound income over your working life.
• Building up bad debt and a bad credit score.
Try instead:
• Protect yourself: set up an emergency fund (easily accessible cash in your own account); Take out affordable insurance while you are young and healthy.
• Invest now: maximize returns over your working life, with time to make up for any unexpected losses. That includes retirement and other investments.
• Invest in yourself: Gain more skills and qualifications to increase your earning potential.
• Control your debts: spend less than you earn; borrow less than you can afford; immediately pay off bad debt (high-interest debt that does not generate income, such as credit cards).
Sporty 1940s
A woman in her 40s needs to be flexible on her feet, 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 your forties include:
• Specifying budgets, wealth building strategies, and reviewing expenses.
• Establish bad money habits that your children will also learn from you.
• Ignoring your own health and well-being.
Try instead:
• Meeting regularly as a couple/family to discuss money. What’s coming in? What goes out? Which expenses are no longer necessary (e.g. unused subscriptions/memberships)? How can you get more bang for your buck (e.g. reviewing utilities, refinancing insurance, refinancing loans)?
• Regularly reviewing financial and legal matters. Make sure your will is up to date; your super performs well; insurance is fit for purpose and provides sufficient cover; corporate and trust structures are well established; you claim all relevant tax deductions and benefits.
• Stay healthy – physically and mentally. This keeps your healthcare bills low, protects your long-term health, and secures your earning power (fewer lost workdays; better decision-making at work and about money).
Helen Baker (pictured) is the founder of the women’s finance company On Your Own Two Feet
Handy 1950s
The useful thing about being in your 50s is that your children (if you have them) are generally older, you have some seniority at work and your earning potential is generally at your highest, Baker said.
But she advises women in their 50s not to rest on their laurels.
Common money mistakes women in their 50s make 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 backup plans can literally leave them out in the cold.
• Failure to utilize pension benefits.
• Do not have a transition to a pension scheme.
Try instead:
• Make financial decisions together. Know your individual and joint assets and liabilities; have contingency plans for death/divorce/illness/dismissal; your estate planning in order.
• Embrace super benefits. Downsizing the family home, spousal and catch-up contributions and low income compensation can all boost your super, and in some cases reduce your tax bill.
• Making a pension plan. Are you retiring together? When? What will your living costs be? Are you eligible for a pension/partial pension? How are you going to spend your days?
A woman is shown looking at bills and using a calculator to calculate payments
Baker said that regardless of a woman’s age, a common mistake is seeking the wrong financial advice, or not getting any advice at all.
“Friends and family mean well, but unless they are qualified, they are giving their opinions based on their own situation, not yours,” she said.
‘Finfluencers (financial influencers) and self-proclaimed ‘experts’ usually promote ideas that benefit them, and 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 could be “the best investment you will ever make.”
- Helen Baker’s new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women, is out now. Proceeds from book sales will be donated to charities that support underprivileged women and children.