Biggest Money Mistakes Men and Women Make
If you think men and women look at love and relationships differently, then the way they perceive and handle money is a galaxy apart.
Many partners who share a bank account may have vastly different approaches to money and financial planning for the future, and these differences can make for some notable mistakes made by both genders.
Though they aren't family counselors, four financial experts weigh in on the financial strengths and weaknesses of men and women based on their years as money advisers, and the take-away for both sexes.
Money Mistakes Men Make
You know the old joke about men not asking for directions? It's just as true -- or even more so -- when it comes to financial planning.
"Because they don't seek out advice, they act on limited information. And less research can easily lead to rash decisions," says Ryan Michler, financial representative at McPartland Group Financial Services based in St. George, Utah.
Many men prefer to go it alone, said Matthew Brock, CFP professional and senior partner of Divergent Planning LLC in Bethesda, Md. He calls it the "Lone Ranger approach."
There is also a level of over-aggressiveness he sees in men. "Older men tend to be more aggressive in their investment habits than necessary. This makes them far more willing to take on more undue risk," Brock says.
Men make money moves more like someone who is playing a game than someone who has others relying on them. "They have a hard time taking their family situation into account. Big mistake," Brock says.
On the other hand, younger men often procrastinate. Risk isn't their big issue. It's taking action.
Another common mistake men make is ignoring the value of long-term care insurance and other vehicles for planning far into the future. "Men would rather play martyr than admit they could get dementia, become incontinent or need a sponge bath," says Michael J. Maynes, a CFP professional in Boca Raton, Fla. "But this is reality. People decline mentally or physically, or both."
Money Mistakes Women Make
The biggest mistake made by the older generation of women -- baby boomers and older -- is not getting involved in financial decisions, says Brock.
Many older women deferred financial decisions to their husbands, Brock says. "The issues emerge years later when they go through divorces or their husbands pass away, and they find themselves backtracking and trying to learn 20 or 30 years of finances they paid no attention to," he says.
Women also may lack confidence in financial decision-making. "The dumbest thing I see women do with money is convincing themselves that they aren't good with it," says Ellen Rogin, president of Strategic Financial Designs Inc. in Northfield, Ill. "They tell themselves things such as, 'I don't have a head for numbers.' The result of this thinking can be disastrous," she says.
Rogin says that many women worry far too much about money. "Here's the issue: Worry is not a financial planning strategy. Fear makes people do dumb things, like selling at the bottom of a market cycle," Rogin says. "When people make fear-based decisions, they aren't making wise decisions. Alternatively, when they pause and clear their heads, they're better able to make long-term decisions that serve them well."
What Men and Women Do Right
Brock says many younger women are doing things right. They may have learned to avoid the mistakes they observed from the previous generation. "Those observations created a generation of women who take more ownership of finances. This same group of women is getting married and having kids later in life," waiting until they are financially stable on their own, Brock says.
Rogin says: "The truth is, women are better investors than men. They view things more holistically, which is great for long-term planning."
When it comes to men, according to Carmel, Ind.-based Peter Dunn, a financial author and blogger known as "Pete the Planner," they are the ones who often look to technology, such as websites, financial software and other tools, to solve money problems and answer pressing questions. Women, on the other hand, aren't as quick to go with the gadget or app.
No matter their age or marital status, men and women both have much to learn from the strengths and the mistakes of their gender and those of the opposite sex.
Women should get more involved in financial decisions, without deferring all financial decision-making to their husbands or to financial planners. On the other hand, men should scale back on risk. Both should be realistic and look for areas of improvement when it comes to determining realistic risk, finding the right level of aggressiveness and realistically planning for an unknown future.
"(Money matters) force couples into conversations they may never before have had together," Brock says. That makes planning and communication the keys to a couple's financial success.