Buying expensive shoes might feel good at the time but cause longer term money headaches. Photo/Adrian Malloch.
Buying expensive shoes might feel good at the time but cause longer term money headaches. Photo/Adrian Malloch.
Women in their forties are potentially heading into their highest earning decade but they are also making poor decisions which can put their financial security at risk, according to financial adviser Karen Essex-Mooney.
Essex-Mooney, an adviser at Lifetime Group, says she often sees women who have made "dubious money moves'.
"My experience is that these often come from an uncomfortable attitude towards wealth, or wanting to please others at their own expense.
"Many women, without realising it, can run the risk of making themselves financially vulnerable."
This has also broader significance with research showing that women continue to influence over 80 percent all consumer decisions made in the home.
Here are the five worst mistakes Essex-Mooney sees:
Spending more than you earn
Essex-Mooney says emotional buying can be a tough money mistake for women to overcome.
"In your forties, retail therapy can be particularly comforting: your skin starting to show signs of ageing, your children don't need you as much as they once did, and that $800 pair of designer shoes can really appear to fill the hole."
She says spending more than you earn can slowly build towards devastating effects and urges people to use budgeting apps to help where their money should go and to track spending.
"Place a small monthly reward into your budget such as a pedicure or a massage to help settle into the habit of spending less than you earn."
Doing a budget and keeping track of your expenses can help you work out where your money is going. Photo/John Wohlfeil.
Taking on high-interest debt
It can also be a tempting time of life let a rising income temp you into taking on more debt.
"Another critical mistake I see is successful women in their forties signing up for liabilities such as expensive new cars, gadgets and new wardrobes.
"Increasing your expenses when your income rises isn't the wisest move, as at this point in your life, it's in your best interest to be more focused on growing your assets and planning ahead."
Instead, she urges women to work on saving a cash lump sum from tax rebates, work bonuses or other savings to build up towards buying the extras.
"You'll save on interest and have peace of mind knowing you're spending money you already have."
Not taking enough – or any – control over finances
Essex-Mooney says all too often she has seen women handing over the financial reins to their male partners.
"While it may seem easier to put your financial health in someone else's hands, it could come back to bite you in the long-term."
She urges women to get involved in all financial decisions - not just the day to day ones - and find out more if they don't know enough about certain areas.
"Invest in your financial literacy by reading personal finance books and websites, or take a short course to tackle the specific areas you need to know more about."
Not protecting yourself against break-ups
Marriage or relationship break-ups can be a big blow to finances for both women and men and those in their 40s and 50s are particularly vulnerable as it can be tough to make up the lost value.
" In these circumstances, your greatest asset is your earning capacity – so it's important for you to invest in your career development and maintain your career path.
Essex-Mooney says women should protect their income even if their partner earns enough to cover all expenses.
"It's not the most romantic thing to do, but this is the most essential. Go into every new relationship with your financial future intact, whatever the outcome."
Relationship break-ups can be cause cause major money headaches. Photo/123RF.
Prioritising children over your retirement needs
She also warns women about being too generous with their grown-up children.
"It might sound cruel, but kids can be Kryptonite – even to financially savvy women. I see smart women undermine their ability to support themselves in their later years by spending excessively on grown children instead."
Essex-Mooney says while it's great to be able to help children in their times of need, it shouldn't come at the cost of your own financial peace of mind.
"Establish what you need to retire comfortably and, as the old adage goes, pay yourself first. A financially strong parent with wealth building skills can teach their offspring a great deal more by example."
