I’m going to clue you in on the biggest financial mistake many women make in their lives. They don’t plan their financial lives for well, LIFE. Women are such givers – we all make sure that everyone else is OK – the kids go to college, help them get houses and things, make sure their parents and husbands are doing OK. But the last thing on the list – is taking care of themselves.
We tend to depend on other people – typically our husbands or partners, but sometimes our parents, to provide our financial security. This is such a big mistake and it can end up pretty badly later in life.
We can’t help it – we are trusting people, and we like the thought that someone else is going to take care of us and we won’t have to worry about money ever again. It’s a nice fairy tale, but many times, that’s exactly what it is – a fairy tale and it sometimes has a VERY unhappy ending.
Life Happens – Husband Walks Out the Door
What would you do if your husband of X years went out the door tomorrow? This happens all the time and in most cases, the wife is left in a heck of a mess and usually with responsibility for all the kids. That would be sad and kind of horrifying, but financially speaking, it’s a total shit show.
Percentage of dads who never pay a dime in child support. The reports vary, but it’s between 25% and a whopping 40%. And it’s rarely on time, in full, or without a huge fight to get it. I never understand that thinking, but it happens with alarming regularity.
That’s why every woman needs a stash of money set aside – even if it has to be a secret stash. No one plans for divorce, but they say it happens in what, half of all marriages? So, start an automatic savings plan in your own name, just in case. Even if your husband stays with you until you’re both 95, you’ll never regret having that savings account. Never.
Life Happens – You Get Sick or Your Husband Does
I learned this when I was unexpectedly diagnosed with cancer a few years back. I say unexpectedly because I had zero family history or expectation that I would get it. Fortunately, I had a relatively easy time of it and I’m fine now, but the bills for something like that are insane.
We also have several friends who have had strokes, organ transplants, and early onset dementia. Serious – “life will never be the same” type illnesses. That is definitely a “life happens” kind of thing and I don’t think anyone can prepare adequately for a situation like that.
But that’s all the more reason why you need to make sure you are fully insured (even if you think you can’t afford it) and prioritize a solid savings plan. Because as much as this situation would suck, it would be even worse if you were too sick to work and didn’t have any money either…
Life Happens – You’re Dependent Your Parents and They Die
I do a lot of financial counseling for people and I see this a LOT. Like a LOT. People get into enormous debt for whatever reason, or they lose jobs or go through a divorce or whatever and move back in with Mom & Dad – sometimes with kids in tow. That’s great, but typically the parents are getting a bit older at that point and eventually something is going to happen. Could be death or a serious and expensive illness like Alzheimer’s or cancer.
At that point, all Hell can break loose. Trust me, I’ve been through this particular roller coaster. We had 4 parents die and not a decent will for any of them. And things can get really ugly and unexpected during the estate settlement process. PS: Do your kids a favor and take the time to get a proper will in place. We did it after the 4th parent died and we lost probably a hundred thousand dollars in the probate process. We got a will and it was the best thing we ever did for our children.
I’m just saying, plan for the unexpected, and even in this case, it more is something that IS expected. You need the help and your parents are probably happy to provide it, but make sure you make the best use of this little reprieve because it could end pretty suddenly and thrust you into a tough situation if you don’t have your financial ducks in a row.
And actually, your parents will be ridiculously proud of you if you start up a thriving savings account. Because they’ve been through their own tough times and they know that life is unpredictable, especially for women and they don’t want to see you making the biggest financial mistake of your life once they aren’t around to protect you anymore.
I know that this is sounding like the MOST depressing list on the planet, but these are real situations. Many of them have happened to good friends of mine. Some were financially prepared for these issues, but some of them weren’t especially ready and they are struggling.
Life Happens – Husband Dies
I left this one to the last because I think it’s probably the most difficult one and one of our good friends just went through it. Sudden car accident, totally unexpected of course. They’re in their 60’s with grown kids, but it was unimaginably rough with a couple of weeks of fading hope and growing despair as he lay in the ICU.
Now she is not only missing her husband of nearly 40 years, but she has to wrap up his law business, file taxes for both business and personal, figure out what to do with the house, and sort out whatever their financial situation is. All on her own with some help from their grown kids. He was a lawyer, so hopefully he had everything set up properly, but you know that thing about the cobbler’s children…
Did you know that in some cases they can freeze your joint bank accounts during probate? Which can take months, especially if there isn’t a proper will. We had that with my father-in-law’s estate, which took close to a year to resolve. While we were paying lawyers about a zillion dollars and contesting the estate with four other heirs, two of whom were “secret” children we hadn’t known about. Life can be fun that way. And expensive.
My point is – if your significant other passed away tomorrow, it would not only be a horrible personal tragedy, it also could land like a nuclear bomb in the middle of your financial life. Just like my recently widowed friend.
What to do to Avoid the Biggest Financial Mistake Women Make
- Step #1 – Get a will, a family trust, and a power of attorney set up immediately. We did ours more than 10 years ago and it cost about $1,000, which might turn out to be the best money we ever spent because we have the necessary paperwork to handle things in case of accident, illness, death, or mental incompetence.
- Step #2 – Set up a savings account in your own name just in case and add money to it every month. This is your safety net to put food on the table and keep the lights on in case of huge life events like these.
- Step #3 – Educate yourself about your family finances. Do you have an insurance plan? We had ours through work, but then we retired and since I’m a recent cancer survivor, I’m uninsurable for a period of years, even though I’m the primary breadwinner.
- Step #4 – Get an IRA set up and start doing planning for retirement NOW. Both individually and as a couple. You don’t want to wait until you’re in your 60’s to think about retirement because your earning power is pretty iffy at that point.
- Do you know where your important papers are? How to access your bank accounts? How much debt you might be in? What your retirement plan is going to be? Who would care for your minor children if something happened to both of you? Do you have a financial advisor? How to contact him/her? Do you have a living will? Have you discussed funeral arrangements?
I know these are difficult things to think about and there are some very tough conversations to be had and unpleasant decisions to make, but I think the point I’m trying to make is that LIFE HAPPENS and you never, ever know what is just around the corner.
That’s the biggest financial mistake women make and you do not want to be one of these women. Friends and family are nice, but they aren’t going to be able to pay your bills or pay your mortgage. And if your parents are gone or in bad shape, there may not be anyone around to help you out.
The worst scenario I could imagine would be to have to go live with your kids, or ask them for money to get through the month. I will go to great lengths to avoid being in a situation like that.
And actually, I have. I’ve had a savings account in my own name since I was 21 years old and living with a loser boyfriend. My dad gave me $2100 for my birthday and made me set up a secret savings account just in case I needed an exit strategy. And I’ve held onto that money through all of life’s ups and downs.
That’s the way I feel about a 401K. That is lifeboat money in case the Titanic sinks and I didn’t touch it for any reason whatsoever. I considered that money as a safety net for me and my family and no one was going to touch it unless we were in danger of going hungry or ending up on the streets. That’s the only good reason to broach a 401K account.
My Mom led a hard life with lots of things that went sideways and one thing she drilled into my skull was that things can and do go wrong and you need to be able to stand on your own two feet and provide for your children.
A lot of women rationalize that they “don’t make enough” to be able to save, or that their income needs to go for college or other expenses. That’s why such a high percentage of women retire in poverty in this country. We’re women and so we give and give to others our whole lives without taking consideration for what we might need for ourselves. But that poverty word, that sure doesn’t sound like a lot of fun, does it?
There are college loans, home improvement loans, car loans, and every other kind of loan, but the one loan they haven’t invented yet is a retirement loan. And statistically, that is the point in your life where your husband is much more likely to die before you will, so you may end up on your own. That is also the point where you are most likely to have health problems of your own and be unable to work.
It doesn’t matter if you are a stay at home mom or if you have a job, it’s time to have a frank talk with your partner about all.the.things in your financial life. I can guarantee that your partner might not appreciate your nosing around in things, and you may learn some things that might upset or confuse you. But there may come a day when you’ll be glad you did.