Women & Money - Avoid These Mistakes

Find out what mistakes women mainly make when dealing with money

The number of female millionaires in the UK is growing by around 11% each year – accounting for 46% of Britain's 376,000 millionaires, and recent research suggests women are set to dominate the rich lists in the years to come.

Plus, when it comes to entrepreneurship, in several regions across the country, women have overtaken men in starting up new businesses.

But at the same time, many women also make common financial mistakes that could prove costly in the future. Read on to make sure it’s not you.

Shopping Debt

It’s fun to joke about your Jimmy Choo habit, but being a shopaholic is no laughing matter – it can throw you into financial strife, often for an item you’ll never even use. Price comparison website uSwitch.com estimates that almost 800,000 British women can attribute half of their unsecured debt to fashion, and having an average personal shopping debt of a massive £8 000. In all, British women spend an average of more than £1,800 a year on clothes, totalling an astonishing £20 billion.

“In today's celebrity obsessed society, where women emulate the shopping habits of their favourite fashionistas, it's not surprising that many are becoming more interested in size zero clothing than nought per cent APR," says Ann Robinson, director of consumer policy for uSwitch.
If you think you have a problem, start setting yourself savings goals, shop at Primark instead of Prada, and make some cash off your unwanted items by selling them on eBay – seeing how much money you’ve spent on useless items may also help you think twice in the future.

Keeping Up With the Beckhams

It’s not just celebrity clothing that British women feel the need to splash cash on – it’s their designer lifestyles, too. In fact, they spend a shocking £4.3bn a year in a desperate attempt to match celebrity style.

When it comes to shopping, more than three quarters of women admit to pulling out the plastic to copy celebrity chic, with beauty products and treatments like facials and manicures topping their ‘Celebrity Spending’ lists. And they’re using their credit cards to spend around £713 a year on fake tans, hair extensions and other beauty treats.

It may seem harmless, but channelling all your extra cash into your nearest salon could have a shocking affect on your future finances. Research from Virgin Money claims that 45% of people with no savings say they cannot afford to save for retirement, yet about £1.8m is spent every single day on cosmetic surgery and each year the average household pays out £769 on alcohol, £1,908 on restaurants and hotels, and £3,542 on debt interest payments.

“It all comes down to choices,” says Simon Fraser, President of Institutional Business at Fidelity International Limited. “Live for the now and cope with old age poverty when it hits, or make a few lifestyle tweaks based on the possibility of living until we are 100.”
To find out how much celebrities spend on life’s luxuries.

Pension? What Pension?

Over 60% of women do not contribute to a pension, and those who do contribute 22% less than men, according to findings by Prudential. Worryingly, the research also reveals one in five women have no additional means of boosting their pension compared to just one in 10 men.
Those women who do save are putting away an average of £236.54 a month compared with £304.56 on average for men, a difference of 22% per month. For a woman, this would equate to £42,577 over their lifetime, which would give them an income of just £3,603 a year for the rest of their retirement – so millions of women will go into retirement either having to rely on a partner or facing a struggle to maintain basic standards of living.

“Women simply cannot afford to close their eyes and hope for the best,” says Ian Martin, head of pensions and retirement income at HSBC. “By the time a 27 year-old woman reaches the age at which she can claim basic state pension, she would be entitled to around £135 a week, but only if she has made National Insurance contributions for most of her life. She should be asking herself whether she can really live on £135 a week.”

If you haven’t begun saving for a pension yet, don’t panic. In an ideal world, saving for your retirement should begin sooner rather than later. Unfortunately, it can seem less of a priority compared to other factors, such as buying a first home or starting a family, but even a contribution of just £50 a month can make a difference. Start now, and look carefully at your finances to see where you can cut expenses and where you can make plans for extra income too.

Relying on a Man

According to research from National Savings and Investments, 60% of women are financial fantasists, meaning that they refuse to accept the realities and responsibilities of financial planning, often leaving it to a partner or ignoring it completely – banking on future inheritance or assistance instead of exploring realistic strategies to boost a savings or retirement fund.
A worrying 60% of women say they do not bother to think about their finances at all and 5% say they will rely on loans when times get tough. Surprisingly, the problem is even worse among widowed, divorced and separated women – with 70% neglecting their financial future.
And women who think they will always be able to rely on their partner for financial support are putting their future at massive risk.

“With the number of divorces at high levels it is undeniable that individuals cannot rely on partners for their retirement finances,” says Gary Shaughnessy, Managing Director, Prudential Retail Life & Pensions.