Text Aileen Lai

We don't drink or smoke, but for many mothers, overspending is our biggest vice. Put us in front of the word "SALE" and we go crazy. Another culprit is apathy — taking money for granted and leaving finances in the hands of our husbands.

Farah F Bahajaj, an experienced Chartered Financial Consultant and Senior Financial Services Manager with Prudential, says, "Women should learn how to handle their own finances and not take things for granted. Don't depend wholly on your partner for financial support. Should anything happen, make sure you have something to fall back on and funds to tide you through difficult times," advises Farah.

Here are some common money mistakes that women commit, sometimes unknowingly, and the expert's opinions on how to turn these around into potential ways to make your money grow.

Money Blunder 1: I'm too scared to invest. So I'd rather put all my money in a savings account because there is no risk.
The expert says: This is not advisable because savings accounts only render about 0.25 – 0.35 percent interest per annum, depending on the balance. Imagine having $1,000 for one year and a paid interest of $2.50. This means that the same $1,000 left in the same account will take about 288 years to double to $2,000. Instead, consider investments like low-risk unit trusts and structured deposits. Get a professional to determine your risk profile, budget, time frame and commitment level. There is a plethora of low risk investments and yet able to garner returns of 10 times or more.  

Money blunder 2: It's my husband's job to settle the bills. I just put my entire savings in our joint account.
The expert says: It’s perfectly all right if you have a reliable, trustworthy and money-smart man as a husband. However, for practical purposes, it is always advisable for women to settle their own bills, if not the family's as well. Thus, should your husband die before you (since women tend to outlive men), you will still have a good grasp of the family's financial situation. When it comes to financial matters, ignorance is definitely not bliss.

Money blunder 3: I have 10 credit cards and I only pay the minimum per month.
The expert says: For the average person, this is a sure-fire way to a major financial catastrophe. The interest charged by credit card companies is 24 percent per annum, calculated on a daily basis. Imagine the ballooning effect of 10 cards! Some card holders end up bankrupt because of this mentality. Settle your debt in full every month and hold just two cards. If you are unable to settle in full for a particular month, make sure you do so as soon as possible. The most pragmatic way is to use cash so that you know exactly how much you are spending and can "feel the pain". Resist buying on instalments even if they offer an interest-free scheme because if the monthly amount is left unpaid, you are still susceptible to the 24 percent per annum interest rates levied on outstanding charges.

Money blunder 4: I can't seem to save any money even though I earn about $4,000 every month.
The expert says: It is not what you earn that matters, it is how much you save. In fact, the more we earn, the more we spend, because of lifestyle and spending habits. A good guide is to save at least 20 percent of your monthly income. The long term compounding effect of your savings can help you lead a life of financial bliss in future. A savings of a $100 per month, invested at a 2 per cent rate of return over a 20-year period can amount to a whopping $30,000. So never underestimate how a little can go a long way.

Money blunder 5: I'm a stay home mum and money's always tight. Should I start a secret savings account?
The expert says: Definitely! Women should always have a separate personal account (secret or otherwise). Emergencies have a way of striking at the least opportune time and this could always serve as a "lender of last resort". Some smart homemakers are frugal enough to save from their household or marketing allowance and leave it aside in a piggy bank or a separate account in the bank. Others use this extra money to invest in protection policy or education policies, albeit small ones, for their children. Little actions like comparing prices, using discount coupons, buying in bulk, etc, will contribute to helping you squeeze out extra money for your own use.

Money Blunder 6: I'm short of cash and these ads for personal lines of credit seem very attractive, plus I can win a new car if I sign up.
The expert says: It is very tempting, especially with freebies or attractive prizes thrown in. However, banks will charge 16.5 – 16.8 per cent interest per annum, calculated on a daily basis. Assume you used the facility for $3,000, and it remains unpaid. By year-end, the amount would have ballooned to $3,495, incurring a hefty interest charge of $495. Use this credit facility only as a last resort and with the idea of repaying it in full as soon as circumstances permit. Otherwise, like the case of the credit cards, it is a financial disaster waiting to happen.

Farah F. Bahajaj is also a member of the Financial Women’s Association of Singapore. She can be contacted at 6228-8933 or 9387-7774.

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