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Women & Money Series: Why Young Women Should Care About Personal Finance

13 September 2009

FIVE BIGGEST MONEY MISTAKES YOUNG WOMEN MAKE:

1) Not making a budget

2) Carrying credit card debt

3) Thinking you don’t earn enough to save

4) Not thinking about your money at all

5) “Stupid Spending”: the Impulse Buy, the Emotional Buy, & the I’ll Just Eat Ramen For the Rest of the Week Buy

AND WHY YOU SHOULD CARE:

courtesy of MsMoney.com

1) Women live an on average 7 years longer than men. That means you will have to set aside 20% more than your male counterpart would to attain the same post-retirement lifestyle.

2) That’ll be pretty tough seeing as how women earn less than men to begin with – 80cents to every man’s dollar, to be precise. To save the same amount as your male counterpart for retirement (so – forgetting that extra 20% you need to make up for your longer life), you will have to be more vigilant with less money.

3) Another roadblock: Women will be out of the workforce an on average 11 years more than their male counterparts. Because the responsibility for young children & elderly parents often fall on women’s shoulders, you will have to plan for 11 years of little-to-no income, where you will be unable to contribute in a significant way to your retirement accounts & Social Security.  Consequently, women’s Social Security payouts tend to be half an as much as men’s.

This may sound kind of hokey, a little bit sexist & presumptuous, & maybe this won’t apply to us & our generation the way it did to our mothers, but…

You can’t rely on your husband’s financial knowledge & prowess to manage your money. Your husband, or father, or whatever male figure in your life is “helping you” by taking the money decisions off your hands, isn’t watching out for you as much as he thinks he is. And even if he has only  your best interests in mind, he will die eventually. Probably before you. (FACT: 3 in 4 women are widowed by the average age of 56.) Or you will get divorced. No matter what, you will most likely be left in charge of your own finances at some point in your life. If you don’t plan well, if you don’t have a firm grasp on your financial goals, if you are unprepared when this happens, you will be screwed.

Women of color and poor women are even more susceptible to the perils of bad financial planning than white women are. Financial knowledge is one of those things, like knowledge about nutrition, that tends to run in families. Unless, of course, you go to school for it. If your parents don’t have good personal finance skills, you probably won’t either. After all, if you don’t learn from your parents, where can you learn it? (Except from TORRENT MAGAZINE of course!) And thus the cycle of being broke-ass continues.

WHICH IS WHY:

1 in 4 women are totally broke within two months of a husband passing away.

87% – more than THREE-QUARTERS – of the elderly folks living in poverty are women.

The Bottom Line: You can’t wait until you’re in your 40s or 50s to think about money, or plan for your retirement. That isn’t nearly soon enough. You shouldn’t wait for somebody else to take the reins, because you’re scared, or it’s a pain, or you think there’ll be time enough for that later, because that never works out. As statistics show, the consequences of not planning ahead, or not planning ahead well enough, can leave you with nothing.

NEXT IN THE WOMEN & MONEY SERIES: A Budget You Can Stick To

– Shiyuan

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The Women & Money series focuses on money management tips for the conscientious woman.

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One Comment leave one →
  1. Vivian permalink
    20 September 2009 12:24 pm

    Very useful, SD! Keep up the finance posts (and all the other posts too!)!

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