In this week’s post, we will explore financial myths for women. A new beginning often comes with excitement and uncertainty, especially about personal finances. Whether you’re adjusting to life after a major transition such as divorce or widowhood, navigating a career change, confronting an empty nest, or simply taking charge of your financial future, it’s crucial to base your decisions on facts, not fiction. Unfortunately, there are several financial myths for women. These can cloud judgment and steer you away from making choices that align with your values.
We will attempt to debunk six of the most pervasive financial myths for women, especially those embarking on new beginnings, and provide actionable insights to help you make informed, value-driven decisions.
Myth 1: “Women Aren’t Good with Money”
The first of our financial myths for women involves an outdated stereotype suggesting women inherently lack financial acumen. The reality? Women are more than capable of effectively managing their finances. Studies show women often excel in long-term financial planning, prioritizing savings, and making investments that align with their life goals.
Actionable Insight: Identifying your priorities and setting clear financial goals that reflect your values can boost your confidence. Understanding what matters most to you can help you align your use of capital (your TEAM or Time, Energy, Attention, and Money) with your values. Whether building an emergency fund, investing for the future, or budgeting for a big life change, breaking your goals into manageable steps can empower you to take control of your financial destiny. Knowing your use of capital aligns with your values can also increase your motivation to achieve this destiny.
Myth 2: “You Shouldn’t Worry About Retirement Until Later in Life”
Many women, especially those starting anew, think retirement planning – and saving – can wait. However, the earlier you start, the more time your investments have to grow. This myth can lead to missed opportunities and financial stress down the road. When it comes to investing, the best time to start was yesterday. The second-best time to start is today. The easiest way to get started is to “Pay Yourself First!”
Actionable Insight: Begin by assessing your current retirement savings and setting up or increasing contributions to a retirement account. Even if you’re in the middle of a career change or other significant life event, it’s crucial to keep retirement planning in focus. Align your retirement goals with your broader life values – what kind of life do you envision, and what steps can you take now to make that vision a reality? If you’re having trouble envisioning your life and the steps you need to take to make it a reality, our life planning process can help.
Myth 3: “Investing Is Too Risky for Women”
Investing is often seen as risky, especially for women who may prioritize financial security during life transitions. If you don’t invest, you will fall further and further behind. In fact, avoiding investments altogether can actually increase the risk of not reaching your financial goals. The following graph shows the increase in the price of a cup of coffee over the years. If your savings and investments don’t grow at least as fast as inflation, your money will buy you less. The key is to understand and manage risk, rather than avoid it. Inflation’s impact on your purchasing power makes investing even more important. While we can’t guarantee investment success, investing increases the likelihood that your savings will grow faster than inflation.
Actionable Insight: Educate yourself about different types of investments and their associated risks. Start small and gradually build a diversified portfolio that aligns with your financial goals and values. Remember, investing isn’t just about growing wealth – it’s about securing your future and funding the life you want to lead. A diversified portfolio with a manageable level of risk can help you live your desired lifestyle.
Myth 4: “Men Are Better Investors than Women”
Research by Fidelity Investments shows women tend to outperform men as investors, despite commonly being perceived as more risk-averse. Why? Women are more likely to adopt a long-term investment strategy, prioritize financial goals over short-term market movements, and are less prone to making impulsive decisions based on market volatility. They also trade less often. Their cautious and consistent approach often leads to better overall returns, as they avoid the pitfalls of trying to time the market and focus on steady growth.
Actionable Insight: Embrace a long-term perspective, and focus on ensuring that your investment strategy aligns with your specific financial goals and values. Regularly reviewing and adjusting your portfolio as your life circumstances change – such as during new beginnings, widowhood, or after children leave home – can help maintain this alignment and ensure that your investments continue to work effectively and support your financial security.
Myth 5: “Debt Is Always Bad”
The last of the financial myths for women we’re discussing today involves a misconception about debt. While excessive debt can be harmful, not all debt is created equal. Understanding the difference between good debt (like a mortgage or education loan) and bad debt (like high-interest credit card balances) is crucial for making informed decisions. In this blog, I discussed the debt I incurred when I returned to college. Having that debt was uncomfortable. But without it, I wouldn’t have earned my college degree or been offered the job that started my career. It’s important to recognize the distinction between good and bad debt.
Actionable Insight: If you’re facing new beginnings, such as starting a business or returning to school, taking on some debt might be a strategic move. The key is to ensure that any debt you take on aligns with your long-term values and financial goals. Prioritize paying off – or even better avoiding – high-interest debt while using other forms of debt as a tool to achieve your aspirations.
Myth 6: “Talking About Money Is Taboo”
Many women are conditioned to avoid discussing money, viewing it as impolite or uncomfortable. While it may be hard to believe, we often find it easier to talk about sex than money. Falling victim to this financial myth for women can prevent you from seeking the advice or support you need during significant life changes. Unless you pursue a career in finance, it’s unlikely you will receive a financial education. Most families don’t discuss finances openly either.
Actionable Insight: Challenge the taboo by seeking out financial education and support. Whether you talk to a financial advisor, join a women’s finance group, or simply discuss money with trusted friends or mentors, open communication is the key to making informed financial decisions that reflect your values.
Aligning Your Finances with Your Values
Debunking these financial myths for women is just the beginning. As you navigate new beginnings, remember the most important factor in any financial decision is whether it aligns with your values. Your use of capital – Time, Energy, Attention, and Money – should reflect what’s most important to you. Aligning your use of capital with your values strengthens your financial foundation. It also empowers you to live your most fulfilling life. A life that aligns with your goals and aspirations.
By educating yourself, seeking support, and making decisions based on facts rather than falling victim to the financial myths for women discussed above, you can confidently manage your finances and build a future that resonates with your deepest values.
Ready to take control of your financial future? Break free from these common financial myths for women and start building a plan that aligns with your goals. Schedule a free call to get started today!
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For firm disclosures, see here: https://apprisewealth.com/disclosures/
Phil Weiss founded Apprise Wealth Management. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25+ years, he has worked extensively in the areas of financial planning and investment management. Phil is both a CFA charterholder and a CPA.
Located just north of Baltimore, Apprise works with clients face-to-face locally and can also work virtually regardless of location.
