So, what is a woman’s number one financial mistake? Ready? It’s . . . thinking someone else is going to take care of the finances for her. This insight comes from Cary Carbonaro, CFP®, and author of The Money Queen’s Guide. She joined me on the set of PlanStrongerTV™ earlier this year. Wealthy or not, women of all economic levels must realize that they will probably be on their own at some point in their lives. Why? Longevity, for one. Sorry men, but women usually outlive us. And, sometimes, the resources a woman believes will carry her through life financially, like an inheritance, don’t materialize. So, here are just a few helpful tips for managing money, and preparing for retirement, during each decade of life. (It’s actually good advice for men, too!):
20s - It’s the decade for financial independence and a lot of “firsts” (first job, apartment, car, marriage). Make this a top priority: Contribute to a 401(k). Earnings have 40+ years to compound! You can’t afford not to do it!
30s - It is at this stage that many people buy their first home. Don’t overpay for your housing. These payments will be with you for a long time. Remember, a home is not an investment asset; it is a primary use asset!
40s - This is often a transitional time of life. Goals change. You could be changing jobs, experiencing an empty nest or getting divorced. It’s a good time to sit down with a financial planner to see exactly where you stand.
50s - These are usually the peak earning years, but you may also be dealing with aging or ailing parents. It’s a great time to make “catch-up” contributions to a 401(k) and a good idea to think about long-term care insurance.
60s - If you’ve planned well, by your 60s, you could be mapping out your retirement, working fewer hours and following your passions! Remember, though, older age brings different challenges for women. We mentioned longevity, but many women have less in lifetime savings. Some women put work on hold to raise children or to care for parents. The result? Lower Social Security benefits, fewer retirement plan contributions, and smaller (or no) pensions. Women also tend to invest less in the market and take fewer financial risks. Each of these are reasons why the importance of financial planning, at each stage of life, cannot be overemphasized.