Why Do Smart, Successful Women Keep Making These Financial Planning Mistakes? Women need to have more confidence in their financial security.
Opinions expressed by Entrepreneur contributors are their own.
Why do so many successful, hardworking professional women feel shame and anxiety around money? In fact, based on a recent study by Transamerica, only 10 percent of women are "very confident" in their ability to fully retire with a comfortable lifestyle. That leaves a whole lot of women who are not at all confident about their financial security.
Related: Female Workers Aren't Saving Enough for Retirement -- Here's How to Change That
These are smart, driven, high-earning women, accomplished in their professions. They got where they are through intelligence, smart decisions and performing well under pressure. And yet many share a feeling of dread that they are not where they should be financially, and that they do not have the power to change that. Money guru Suze Orman notes that fear, shame and anger are the biggest obstacles to wealth. If only women knew that change is possible for them with just a few incremental steps.
Let me share a story with you: When I met Laura, she was initially just looking for guidance with her investments, but it became obvious that what she really wanted was guidance for her career. She was a successful attorney who wanted to change careers but was hesitant to give up the income. Her challenge was that all she knew was law. After relocating to another city to practice law, she realized that it wasn't the location of the job that was the issue, it was the job itself. With her high income she was financially secure, but she desperately wanted to have a life that her current profession just didn't permit. She felt stuck. If she left the industry, she'd give up financial security. If she stayed put, she would remain miserable. We needed a strategy that planned for her to finally make the switch to another career, in her case one that paid substantially less.
As a financial life planner to professional women, I cannot tell you how often the situation is the same when I first sit down with a new client. Many are in high-powered jobs with big salaries, and are miserable. Some have saved money (but is it enough?), others have saved none. If they dig below the surface, they are afraid of what they might find out -- shame around where they currently are financially, anxiety about never being financially secure and what it might take to get there. They are on a treadmill and don't know how to get off. I see this over and over again.
Related: The 24 Most Powerful Female Executives and Their Net Worths
In Laura's case, we dug in to explore what she wanted her life to look like, where she was currently, what had to happen to make the changes she wanted. It came down to getting a clear picture of where she was financially and professionally and what steps we needed to take to get her where she wanted to be. I'm happy to report that several months ago Laura was able to transition into the job and lifestyle she wanted. All it took was a little planning.
There is no magic to financial security. In fact, I have found that for women professionals there are four major obstacles to financial security and living the life you want. By taking steps to manage these derailers, women can turn the shame and anxiety into hope and ultimately financial security.
Derailer 1: Not knowing what you really want your life, career or financial situation to look like.
By spending time here, thinking through what your ideal would be, then detailing those goals out, you can create a plan to reach those goals. Write down where you'd like to be in three, five and 10 years and prioritize those goals. By knowing what is important to you, you can start planning.
Derailer 2: Not knowing where the money goes.
This is a big one, and easily managed if you track where you spend your money. We suggest using an app or a spreadsheet to follow your money for two months to identify trends. Once you know where you spend your money, you can choose to spend it on goals that are more important to you.
Related: Women Can Use These Simple Strategies to Save Enough for Retirement
Derailer 3: Not having a plan for your career, not only from a compensation standpoint, but from a lifestyle standpoint.
As a professional woman, your career not only funds your goals and lifestyle, but it dictates your quality of life. Think through what you want your career to be and get the resources here that will help you. I've found that business coaches are a great resource here.
Derailer 4: Not having a plan of action.
Without putting pen to paper and taking steps to move you toward where you want to be, financial security is just a wish. You can turn it into a reality if you know what you want to achieve and take steps to get there. On one sheet of paper you'll want to write what your goals are, where you are right now financially, the gaps you see and some small, actionable steps you are willing to take to close the gaps. Revisit this paper once or twice a month. It will change over time as your goals and needs change, but that's ok. You'll find that once you start to take a step your anxiety level drops.
Many professional women do not realize that they can change their financial situation and the anxiety and shame they feel in just a matter of months. By managing cash flow, leveraging your career strategically, making intentional choices with your financial resources, you can have the peace of mind you long for.
