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Ten Financial Lessons for Women

I’ve learned quite a few financial lessons over the years, and sadly, still learn some over and over again! I often swing from periods of financial restraint and reliable saving—to a lack of control swayed by temptation and scattered saving at best. The biggest mistake that women make, according to my brother, Chip Roe, a partner with Charlie Potter Financial Group in Durham, North Carolina, is that they often forget to focus on retirement saving and long-term care. Too many of us opt-in and opt-out of the workforce and we don’t have the coveted 401-Ks or IRAs that our spouses might. If a divorce occurs, some of us will be drastically affected if we haven’t focused on our own retirement savings plan. With that said, here is my list of the top ten financial lessons I’ve learned over the years that, hopefully, may help you:

  • Never loan a large amount of money to a boyfriend

  • Never open cell phone accounts in your name to give to a boyfriend or friend. I learned this the hard way as a phone given to an ex-boyfriend landed me with credit trouble that I spent years clearing up after the said ex-boyfriend racked up a $900 bill and wouldn’t pay. I ended up closing the account and paying for it myself on a payment plan—but I still get peeved that I don’t have a perfect credit report because of this.

  • If you have little savings, don’t invest your money in individual stocks, no matter how compelling the company may be. My husband and I learned the hard way in the 1990s when individual investments in tech companies went sour. Instead, invest your money in well-rounded mutual funds with a good reputation. Ask your advisor, or compare mutual funds on Morningstar.

  • Take full advantage of your company’s 401K plan or other savings plan

  • If you are a freelancer, pay yourself first—invest the maximum allowed into a Self Employed (SEP) IRA and know how much taxes you’ll have to pay! Far too many of my ten years as a freelance writer and editor landed me with tax sticker shock.

  • If you take the time to invest in a mutual fund, do not pull all the money out. My brother helped me to invest in two mutual funds when I was a junior in college. He was so proud of me for saving $2,000. Had I kept this money in the funds, I would have quite a little bundle today. When pressures from college and grad school were too intense—I cashed out both mutual funds instead of bothering anyone. I should have swallowed my pride and asked for help or gotten a temporary school loan.

  • If you own a house in a city where prices historically rise—don’t sell. Even if you are moving to another state, sometimes it is better to rent your home than sell it. (If you can afford to do so.) When we sold our house in Los Angeles in 2002, two years later, it had almost doubled in value. Sure, the market is going down currently, but it is still valued at more than we bought it for and historically, Los Angeles is a market that will keep going up.

  • Create a rainy-day fund. The next time you are tempted to buy a gorgeous pair of $350 shoes, remember that impulse buys eat into your rainy-day fund and if you fall ill or have an accident, or lose your job, you’ll need to make sure that you have at least two to three months savings.

  • Don’t be tempted to get house-poor. Just because other neighbors may renovate or re-decorate often, doesn’t mean you have to—especially if you are working part-time or staying home with children. You can have that perfect kitchen or new dining room table at a later date when the purchases won’t affect your ability to save for your retirement, or invest in a 529 for children’s college.

  • Pay for your car and keep it for a long time, if possible. I put a small down-payment on a car ten years ago and ended up with high monthly payments and when it was time to sell, four years later, only broke even. Buying a used car with a good track record and a good resale record, like a Volvo, makes sense and can save you money in the long run.