117. Five Most common money mistakes and how to avoid them

In this  episode  we discuss the 5 most common financial mistakes women tend to make. They indicate that often, women are not involved in long-term financial decisions or they fail to invest money in their own names. They also mention pitfalls like investing in high-risk schemes without a proper understanding of the risks involved, striving for financial perfectionism leading to inaction, and losing sight of the long-term financial goals.

42 - DIY a Financial Plan
45 - Start your first Stocks & Shares ISA
79 - How to start a pension
81 - How much risk should you take
YOUR HOST

Julie Flynn is an experienced independent financial adviser and financial coach. Justice and equality drive Julie. Which is why she’s spent years studying and researching how stress affects our financial decision making.

Julie is best known for her work with women who have lost their partner and coaching financial services business who want to implement fair and transparent charges.
Ebb & Flow Financial Coaching | Bree Wealth & Tax | Instagram

CO-HOSTS
Emily Pool is a Financial Planner and Will Writer. She is passionate about empowering people to invest their wealth (pensions and savings) sustainably and in line with their personal values.

Michelle Lambell  started her career in financial services as a Stockbroker in 1999 undertaking both advisory and discretionary investment management. Today she is a Chartered Financial Planner, specialising in retirement planning advice, pensions and investments and a Certified Financial Coach. 

Sara Walker is a financial planner and financial coach with 33 years’ experience in financial services. She wants all women to feel financially confident and uses her professional and life experiences to support and educate women over 40 so they in turn feel able to support and be role models for the younger women in their lives.

Jennifer O'Neil is a mortgage and protection specialist and director of Athena Mortgages. Having been in the industry since 2014 Jennifer decided to set up a company in 2020 that suited her core values as a broker – integrity, service, honesty and continuous improvement.
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Transcript

Julie [00:00:03]:

Welcome back to another episode of the Women and Money Cafe podcast. Now today, it's just me and Sarah with you. Sarah, how are you doing?

Sara [00:00:11]:

I'm alright. Thanks. How are you?

Julie [00:00:13]:

I'm alright. Thank you. Okay. Because it's the 2 of us, and we've left alone. Like, what should we talk about today? And we thought what would be a good idea is let's share with you the 5 most common mistakes that we see women make with money. So sit back, listen, pay attention. And if you're making any of these mistakes or you know someone that is, point them towards the podcast. Okay.

Julie [00:00:36]:

So, Sarah, do you want to kick us off with the first thing, the first most common mistake that you see us lot make with our money?

Sara [00:00:47]:

Yeah. Okay. The most common one is that women are still not fully in the picture of any full joint financial Decisions, situations. Women are still, I find, on the whole, managing what I call the day to day Money, whether that's Kids, bills, household, all that stuff that takes a lot of organizing and what have you. But that means, consequently, the partner is then often the one who is Doing the investments or the pensions, and they either don't realize that they might have stuff in their own name or, worse still, they don't have any longer term savings in their own name. I was once told by a very wise lady I met many years ago that women should always have ready to hand their purse, their passport and their trainers. Now that might sound a bit extreme, I took from that, and I also was told there from a very young age, never to rely on I was told a man, but anyone else Women money. Now It doesn't have to be that extreme, but I think it's important because we still see so many women on the back financially, Women relationships break down in particular.

Sara [00:02:01]:

And I just really want to encourage women to start having money in their own name, to make sure they've got savings in their own name and investments in their own name, however small, you're going to come onto that book, then it's really, really important.

Julie [00:02:15]:

I think that's a really good point as well. Like, if you think about the skills it takes to manage a household budget for a family. You know, you were saying, like, making sure there's money to pay the bills, making sure that the food's the cupboards suck with food, paying for all the school trips, juggling all that, they are some serious money skills. Yes. So if you can do all that, you can get your head around all the investments are the long term money. And I would say that probably my experience reflects yours that we've got women that are, like, the CFOs of the family, and they are running the operating budget, if you like.

Sara [00:02:50]:

Yeah.

Julie [00:02:51]:

Yeah. But the Jennifer they're they tend to be in charge of the long term assets, so the pensions and the investments. So, obviously, you and I have never fallen into that camp because probably because of what we do for a living. But if someone's sitting there and they are in a relationship and they're thinking, okay. Yeah. That's me. I don't pay attention to that stuff because I'm busy and it's boring, and they do it, and I'm sure it'll be okay. Can you give us any suggestions on, like, quick, easy ways to start engaging with the long term assets a bit more.

Sara [00:03:29]:

Well, there's 2 things you can do. 1 is start to have try and have some money conversations with your partner, which we've alluded to in other episodes. And the other thing you can do is look at the money that you're bringing in, or is there a budget that comes in that From that budget, it's a question of that's what you have to run the household. Is there preferably openly with your partner, Is there a way that you can say, can I have a small amount of that for me? Or is if you're bringing your money into the pot, do you see any of that money? Does it all go into the joint Emily? Oh, crikey. This month, I was going to buy a new pair of shoes, or I was going to Save for this, but actually, suddenly, there's 3 school trips in Money half term because that's what used to happen to me. So I would think That is trying to make sure that you can keep a little bit back for yourself whether you're earning money, whether you're not earning money, trying to have open conversations with your partner. You know, I know that's not an easy one, and if you've not operated like that, it can be very hard. But we have got tips in other episodes to help you with that.

Sara [00:04:38]:

But it's just Start even if it's £10 a Money. Something that's just for you. It's something have a little goal or something you want to save for. Have a little goal. Put us £10 a month aside that's just in your name, that's just for you. And then once because we all know, don't we, that once you start seeing money build up. Once you start those habits, it becomes quite addictive.

Julie [00:05:02]:

It does. It does. I think my top tip as well, and I've probably mentioned this before, is if you're the one that's not terribly engaged with what all the pensions are, what all the insurance says, and all of that, what you need to do with your partner is get a 1 page document, and I've got a template for this. So if you want it, just drop me a message, and I will share it. And it's just it's arranging everything into columns. So it's like, what have I got, how much is it worth, and what's it for? So likes of Money. I'm thinking about I'm picturing mine. So the in the 1st column, there'll be a Zurich level term assurance.

Julie [00:05:37]:

It's life cover. It's for a £150,000. It's for if I die. The next one down, it's got my pension. How much it's worth? It's for retirement. So you've just got a 1 pager that you can quickly see where all the family assets I'll list it. Just update it maybe once a year. But if you want a copy you can

Sara [00:05:57]:

see how much of that is in your name mhmm. And how much isn't? Because quite often, if there is if there is quite a gap between, you know, 2 people's Earnings in a partnership, there's a lot of focus on protecting the person who's earning the most. And then often, the other person gets booked. So there's often a real divide still to this day because we're all busy, and, you know, a lot of it is just we just haven't had the time even if we've got the inclination to sit down go through it, but I love the 1 pages.

Julie [00:06:28]:

Yeah. Okay. So that's the Money of the our common mistake number 1 is not getting involved with the long term money. Right, what's the second Money you've got for us, Sarah?

Sara [00:06:39]:

Oh, you're asking me to remember. Yeah. I another one I come across a lot is a lot of, women seem quite engaged on the fact that they feel they should be investing, and that's great. But they end up sometimes investing or what I would call speculating Women something like Bitcoin or something short term Because they're lured by I must invest, I must invest, I should be investing, but, actually, they haven't yet sorted out what we would call, you know, your basics, And they haven't yet got, like, cash emergency fund, or they might still be using a credit card or have debt whilst they're investing or speculating in something that is probably quite high risk, and they haven't had a chance to sit down and think, well, is that really going to help me achieve a goal? They might not have actually have a Purpose for that Money, it might just be I should be doing this, so I'm going to do it without thinking about the whys and what's it for. And have you got the basics in place to start with?

Julie [00:07:38]:

I think that's a really good one because I had this conversation with a woman not that long ago. She phoned me on Facebook, and we had a chat. And she's like, I know we should be investing, but I don't know where to start. I don't know if I should go with crypto or forex trading.

Sara [00:07:53]:

. Okay. So

Julie [00:07:56]:

problems. But these are the things that she'd heard about.

Sara [00:08:01]:

Yeah.

Julie [00:08:01]:

See, nobody talks about the boring kind of investments, which are the ones you're meant to start with. Alright? You're not meant to start with crypto or forex trading. But, yeah, it's like that notion that I should be doing something and then going and doing, like, something a little bit crazy.

Sara [00:08:20]:

I like it. You know, when you feel I should be doing some exercise, I should be doing and you go and join some really expensive all Singing or dancing, Jim, because I can do this, and I'm going to do this class. And you knock yourself, and you bust your back or whatever in the 1st week, and then that's it. You never it's a bit like that, ladies, you know. You're all in or you're all out, but, you know, there are ways to gradually get in and, you know, Step up. So if you're if you like that or one of those, it goes on extreme diets, you know, I'm either eating nothing or I'm eating everything in sight, my seafood diet, Or you know, it's very much the same thing. There are way you just you just dip you turn the water and you gradually start.

Julie [00:09:01]:

See, because the Money that springs my mind as you're talking about this is impulsivity. So, yeah, one of the things we see is people being a little bit impulsive with money. Now the flip side to that, one of the most common mistakes I'm going to share that I see is the flip of that, and it's this this striving for perfectionism. So it's like what you're saying is going back to that idea. I know I should be doing something. But before I do anything, I need to understand it in its entirety because I'm aiming for perfectionism. So if I'm going to do it, I need to get it absolutely right. And then what happens is you become paralyzed because you're trying to absorb too much information, and you're scared of getting it wrong.

Julie [00:09:42]:

So what happens is you end up doing nothing. And then 10 years have passed, and you're like, shit. I was going to do a pension, and I didn't do it because I have to get the right pension. And I'm going to I'm going to throw out there Poole. There is no such thing as a wrong pension. They're all right. Just get 1. Just get 1.

Julie [00:10:02]:

1 and start. Obviously, don't be doing forex or crypto in it. Okay? Well, there's that no that notion that I have to get this right, this this idea of perfectionism. And it just it stops people in their tracks. And I'm going to argue that some action is always going to be better than inaction.

Sara [00:10:22]:

Oh, yes. Always. Yeah.

Julie [00:10:26]:

So if you're listening to this and you're thinking, I was going to start an ISA or I was going to start a pension or I was going to put some money in emergency fund, but I don't know what the right thing to do is. And until I know the right thing, I'm not going to do anything. What would you say to those women, Sarah?

Sara [00:10:42]:

Bugger the right thing. Just Women to a few more. I think we can probably give them some links specific episodes that we've done and a few other ideas, but, yeah, just start. Just take your 1st small step.

Julie [00:10:58]:

Yeah, I think that's a

Sara [00:11:00]:

There's no such thing as perfection anyway.

Julie [00:11:02]:

No. You can have really sort of, like, vanity thinking that something is good or something is bad. I would say that if you go and pick, let's just say, a pension from any UK provider, they're authorizing if they're regulated by the Financial conduct authority. The worst thing that will happen probably is that you will pick a pension that doesn't have many fun much fun choice in it. And given that you've had analysis paralysis because of choice, that's not necessarily a bad thing. Or the other worst thing that could happen to you is you could have got tiny bit cheaper if you've gone somewhere else. Neither of these are devastating results. So you I don't think you can actually get it wrong.

Sara [00:11:41]:

Just need to start.

Julie [00:11:43]:

Alright. The other most common so this is number 4. That was mistake number 3, and the striving for perfectionism. My number 4 mistake that I see most often. And at first, you're going to be like, what, Jules? And it's losing sight of why you're doing it. Why am I doing why whatever it is you're doing with your Money, before you start doing something with your money, be that saving, investing, pension, whatever, know why you're doing it. And I'm going to call that a goal. So when people start to lose sight of the call, that's when they do daft things.

Julie [00:12:20]:

So I try and think of an example. Like, let's say you started listening to us a couple years ago and you're like, oh, that ISA thingy. That sounds good. I'm going to go and get me one of them because I know that I want to retire earlier than the state pension, and that money can help bridge the gap for me. So this is decades away that you'll actually need that money. But then in 2022, you saw the value of it drop. And you're like, I don't like this anymore. It was fun when it was going up.

Julie [00:12:48]:

No. I don't like it. I'm just going to pull it out. That's because you lost sight of the goal because you don't need that money for another 10, 20, 30 years. So it's Women you lose sight of the goal and you react to something in the moment. Rather than checking in with what my long term plan is, that's when we make mistakes, and the mistake is you end up losing money. That's one of the most common ones to see. Alright.

Sara [00:13:15]:

Don't do anything because you think you should or just for the sake of it. Make sure it's always got a purpose.

Julie [00:13:22]:

Uh-huh. You know what? Write it down. Go and get a bit of paper. Write at the top of it, my financial plan. And then write down, I am putting, for argument's sake, a £100 a month and an ISA because I'm building up funds to help me bridge the gap when I want to retire, when the pension kicks in, or I am putting £50 a month into my pension because I want to have more than a basic standard of living and retirement, whatever it is, write down what you're doing and why you're doing it. And then when you're tempted to do something with it, go and check-in with a bit of paper and ask yourself is if the action I am inclined to take, is that aligned with what I wrote in the better paper? If isn't, step back. Don't push any buttons.

Sara [00:14:16]:

Yes. Is

Julie [00:14:17]:

there anything else you'd like to add on that one?

Sara [00:14:20]:

I'm not sure we can. Yes. So Yeah.

Julie [00:14:28]:

Mistake number 5. And this was your idea, and I absolutely love because as soon as you said, I'm like, oh my god. Yes. I've done this. You've done this. Like, I'm pretty sure we've all done this, haven't we? You're looking blankly at me. Do you want me to remind you?

Sara [00:14:45]:

My memory's got complete.

Julie [00:14:47]:

So Sarah observed mistake number 5 that women seem to seem to make, and I'm confessing I've done it. I know you have. And that is that we fail to spend money on ourselves. Oh, yes.

Sara [00:14:59]:

The biggie. Mhmm.

Julie [00:15:02]:

Talk to me about that one.

Sara [00:15:05]:

Well, I know it's very common in moms, but it's not just if you've got children, there are often other, loved ones in your life or indeed other things in your life that you might want to spend money on. But I think it can come from 2 things. It can come from a need to maybe overindulge or overprotect or over spoil We'll try and do something that was very different from perhaps your own experience in childhood, but it can also come from the fact that you don't necessarily think you're deserving or worthy of Spending money on yourself. So whatever's driving it, if you've got a spare £10, £100, or £1,000, you don't need to spend all of it on somebody else. And if you're not comfortable spending it on yourself, then start that little savings plan or little investment for your future self. Yes. We are we are it's the most common thing. And when I suggested this in a group of women recently who were a very mixed age bunch.

Sara [00:16:14]:

Half of them said, oh, yeah. Yeah. That's me. And the other half were like, I wish I had that problem. I actually spend way too much on myself. You can't win, you know, if

Julie [00:16:23]:

you want.

Sara [00:16:24]:

But, it's very interesting how And then but each group had the guilt of 1 had the guilt if they were spending it on themselves because they thought they should be spending Money, and then what happened is they then spent the same amount on the loved ones and then ended up they were just spending too much. And the other ones were like, Yeah. But I they come first. They're the most important thing. But as we know only too well that we come first Because if we're the ones that care and love for them, then we have to come first. Otherwise, who's going to care and love for them and spoil them and all the rest of it? So Spend it on yourself. Well, spend some of it on yourself, ladies. You always deserve it.

Julie [00:17:09]:

I think as well, see coming at it from a parent point of view is spending money on yourself. If this is something not something that you actually are comfortable or regularly do at the Money. As you're demonstrating a pattern of behaviour to your children and, like, you want to show that you're a personal worth and value, and they're allowed to do that for themselves as well. You don't want them growing up thinking, okay, we don't spend money ourselves because then it just passes down through the bloody generations, doesn't it? I know that I struggled with this. I started small once I realized that. So I started I bought myself flowers. That was one of the first things I started to do, and I just gradually inched up what I was comfortable spending on myself because I found it really hard. So I bought myself some flowers.

Julie [00:18:02]:

Then I ended up, I think, I got to sit where I bought myself some jewellery as well. So it was just acclimatizing myself is sticking your toe in the shallow end of the pool and just edging yourself into it slowly.

Sara [00:18:16]:

Well, that's kind of what applies to most things that we talk about, isn't it, whether you're starting anything, Emily. I think When certainly when our house were younger, Money was very tight. If it's a question of, You know, there'd be needs. It might be you need a new coat. It might be that the kids need a new school uniform. It might be whatever it is. Everyone else's needs were met first, and you only got a new coat. There was still something left.

Sara [00:18:46]:

So, And I don't there's nothing wrong with that, but I think if it's a question of money is that tight, then it's a question of acknowledging the fact if you're really not in a position financially, you know, to spend much on yourself, it's just acknowledging the fact that, Okay. It's need for the family, but it doesn't mean I'm not deserving of it. It's just, you know, it's just prioritizing where the need is. But, Yeah. It's, and I think sometimes habits come from that where it's been a necessity because, actually, the children have to go to school uniform and things like that, that then it becomes a habit, and it's a habit that's hard to break out or perhaps when things get a bit easier as well.

Julie [00:19:30]:

I think that's a really good point, actually. And I thought that Cafe to me as like you were saying, if there isn't actually money to spend on yourself. Or if you're like me and it's just really hard to do, you need to go slowly. I would suggest one of the first things you can do, and we all have this to spend, it's time. Yeah. You know, make time for yourself. Decide, right, I'm going to take this hour and I'm going to do something that I like. It doesn't have to be productive.

Julie [00:19:58]:

It doesn't have to be for work. It doesn't have to be for the house. It's just something you can be totally indulgent with that 1 hour and do whatever the hell you want with it I'm building up that way. Yeah. Alright. So what we've got then so far is, like, we will work through our top 5 to 6. And so Money, your first one said it was Women are get involved with long term money.

Sara [00:20:24]:

Right? And have money in your own name.

Julie [00:20:27]:

Have money in your own name. Then you were saying talk to me again. Remind me of mistake number 2. It was to do with crypto, wasn't it, or something like that.

Sara [00:20:36]:

Oh, Yeah. Just so often seen the mistake when they feel they should be investing and should be doing something, and they've gone and invested, You know, in a bit sometimes it isn't something like crypto. Sometimes it's not. But they've invested something that's not always that appropriate, but more importantly, they've done that before Just because they think they should without actually having, a, a purpose for it and, b, having the basics, they might still be using a credit card instead of having an emergency problems and thing and things like that. So, it's going back to the basics. Don't just do things on a whim. Everything's got to be done. I think we've heard something earlier intentionally and with purpose and understand.

Sara [00:21:18]:

If you don't understand exactly what you're doing, understand why you want to do it. As you said, reduce your goals. Alright.

Julie [00:21:24]:

Which took us on to mistake number 3, which is always number 3 was perfectionism. You're sitting there and you've been thinking, yes. 6 months ago, I was going to open that pension. I still haven't done it. Perfection does not exist in financial planning. As soon as we make a decision that's out of date, you can't actually get it terribly wrong providing you stay away from the whole crypto forex thing. Right? Just go pick an Isaac. Go pick a pension.

Julie [00:21:48]:

Go stick 50 pound in a savings account. You can't actually get it wrong. It will nothing bad will happen if there was a slightly better pension you going to pick, however, just take action. Any action is always going to be better than an action. And then my number 4 was about goals, losing sight of the goal. So when we forget why we why we did something, that that leaves us open to making mistakes. So the money that you were investing in an ISAR and then it takes a drop in value, and you're having a bit of a freak because it looks like it just keeps going down. But you your goal, your plan, you didn't need it for another 10, 15, whatever years.

Julie [00:22:27]:

If you go and pull it out, that's the worst possible thing you could do. If you'd reminded yourself what the goal was, you just stuck with it, and you make lots of money that way. So don't lose sight of why you're doing a thing.

Sara [00:22:39]:

You can fit your goggles on a post it note and stick it on the fridge or whatever works. Yeah.

Julie [00:22:44]:

Whatever works. I'm a fan of the post it note. Yeah. And then your last 1 is, we need to spend money on ourselves. So or invest money for ourselves.

Sara [00:22:55]:

Mhmm.

Julie [00:22:56]:

We can spend or invest money for ourselves.

Sara [00:22:58]:

Money for me. Doesn't matter what it looks like. Right.

Julie [00:23:01]:

Me money is Sarah's message for you. Alright. So any last thoughts Sarah, before we wrap things

Sara [00:23:12]:

up. Yeah. Just I would just you know, As women, generally, we are still on the slight back foot financially whether that's Because we earn less, we take career breaks, whatever the reason. So as much as things are beginning to change, ladies, it is absolutely down to us to actually take the steps and take the action to start making a difference in the area. So try and take a little bit of control, if you are able to, of your own financial destiny or future or security if you can.

Julie [00:23:49]:

Alright. Fantastic. Also, what I'll do in the show notes, I will put a link to 2 other episodes that might help your if you've got that analysis paralysis thing. We've done an episode on how to start a pension. In less than 30 minutes, we tell you how to start a pension. We've done an episode on how to start your fast stocks and shares ISA. So if these are the things that have been on your to do list that you have not taken action on, then go and check these out, and we'll take care of you. Alright.

Julie [00:24:16]:

Sarah, thank you very much for that. That was fun, wasn't it?

Sara [00:24:20]:

Yeah. Well, we can talk for hours, can't we, really?

Julie [00:24:22]:

You and I, for sure. Uh-huh. But we've done we've done well to got our 5 5 biggest mistakes that we see. So, thank you for that. Listeners, thank you for listening. And until next time, please do take care of yourself.