Proper financial planning is critical. Avoiding financial planning mistakes is especially important for married women because they face unique factors that impact their long-term financial security, for example, career breaks and outliving their spouses.
Knowing the 5 financial planning mistakes below, and how to avoid them, gives married women greater financial control and independence.
Mistake #1: Leaving Financial Decisions to One Spouse
Marriage is a partnership and oftentimes, each partner gravitates to the role they play best or are most comfortable in. Many women feel intimidated by investment strategies and leave these decisions to their spouse. While playing to each other's strengths might seem efficient, allowing one spouse to handle all major financial decisions can limit financial literacy and control. Both partners should be actively involved and capable of making joint financial decisions.
How to Avoid It: Having money conversations can be difficult, especially if one spouse is accustomed to making the decisions. Married women who want to become more actively involved can start small by learning about their household investments, asking questions, and actively participating in investment decisions. Setting up regular financial check-ins to discuss investments, savings, and long-term goals also provides the opportunity for greater involvement.
Mistake #2: Not Contributing Enough to Their Retirement Account
In many cases, one spouse’s retirement or long-term planning takes priority, often leaving the other spouse unprepared. Many married women assume their spouse’s retirement plan will cover both of them, and instead of contributing to their own retirement accounts, they divert their salary to other joint expenses such as debt repayment, family vacations, childcare and education. This puts them at risk of being unprepared, especially if they outlive their partner.
How to Avoid It: Marriage is about sharing your life with a loved one, but both spouses should have individual retirement accounts and a joint retirement plan. Married women need to ensure they are contributing to separate retirement accounts, such as 401(k)s or IRAs, and not dedicating their income to expenses.
Mistake #3: Not Having Access to Financial Accounts
Some married women are aware of the joint finances but don't know how to access key accounts (e.g., retirement, savings, investments), believing it's sufficient that one spouse has the information. Unfortunately, this can cause significant stress during emergencies or result in getting locked out of accounts if the relationship changes.
How to Avoid It: Married women should request online access to all financial accounts and ensure they know where physical copies of key documents (like deeds or investment papers) are stored. They should regularly log into accounts to keep their access active and they should sign up to receive updates when changes are made.
Mistake #4: Not Maintaining Strong Individual Credit
Not maintaining individual credit is a mistake that can leave many married women financially vulnerable. If all credit is tied to joint accounts or a spouse’s credit, a woman may be left without a strong individual credit history. This becomes problematic in case of death of a spouse, divorce, or emergencies that require applying for credit independently.
How to Avoid It: Married women should maintain a few individual credit accounts (e.g., a personal credit card) to build a strong personal credit history.
Mistake #5: Not Considering Life Insurance
Many couples don't consider life insurance for the lower earning or non-working spouse (most often the woman), assuming it’s unnecessary. However, replacing their contributions such as childcare, household upkeep, etc. could be costly and negatively impact the lifestyle of dependents and other loved ones who benefitted from the spouse's efforts.
How to Avoid It: Assess the cost of replacing the contributions made by the lower earning or non-working spouse and take out adequate life insurance for both spouses, not just the primary earner.
By becoming aware of these 5 financial planning mistakes, and knowing how to avoid them, married women can have greater control over their financial future, and prevent financial vulnerability in the event of divorce, widowhood, or other life transition.
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