Women should avoid these 3 financial mistakes

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It’s no secret that women tend to be in worse financial shape than men. According to BlackRock’s 2015 Annual Global Investor Pulse Survey of more than 4,000 Americans, women are more likely than men to have no savings or investments, and by some measures, women’s average account balances are dwarfed by men’s.

Part of this financial gender divide can be blamed on factors beyond females’ control. For instance, women typically live longer than men and more often end up as the primary caregivers for their children, elderly parents and spouses.

But certain common behaviors that can derail a woman’s finances are also to blame, including these three frequent mistakes women—and men—may want to avoid.

Mistake #1: Not managing careers strategically

While women’s increased education and labor force participation have narrowed the wage gap, women still tend to make less than men. Women make 79 cents for every dollar made by their male counterparts, and the average full-time working woman loses more than $460,000 over a 40-year period in wages due to wage inequality, corresponding to 12 additional work years.

Some of this wage gap can be explained by factors such as industry and hours, but behaviors may also have something to do with it. First, women are less likely to ask for a raise than men, at 47 percent vs. 60 percent. In addition, while men tend to get promoted based on potential and women based on past performance, men also apply for jobs when they only meet around 60 percent of the stated criteria, while women tend to only apply if they meet all requirements.

Some have attributed these behavioral differences to women’s lower confidence levels and fear of being perceived negatively for behaving assertively. Researchers have found that whereas men come across as straight shooters if they’re assertive, women tend to be perceived as pushy and aggressive and risk getting negative evaluations based on their personal style rather than work quality. In addition, women are also often socialized to follow rules, often too literally. They may not realize that doing a good job only gets them so far at work, and self-advocacy, mentors, sponsors and a better grasp of unspoken organizational dynamics are also needed.

Mistake #2: Only considering current income when deciding whether to leave the workforce and stay at home

In the U.S., women have a lower workforce participation rate than men—56.8 percent vs. 69.1 percent. This is partly because many women feel they can’t afford to continue working when they start a family, given the high cost of childcare.

But when making this decision, many women may just be comparing childcare costs with the pay information they have most readily available—their current salary rather than their full pay and benefit package, which may also include medical, life and long-term care insurance. This is a behavioral tendency known as the availability heuristic. Women may also exhibit what’s known as a present bias and just focus on their immediate income and state of mind rather than on the long-term income implications of giving up work. Such implications include the impact on any pensions as well as social security payments, which are derived from contributions during one’s working years.

In reality, however, weighing more than current pay against childcare is very important when it comes to future finances. In other words, women should make sure to think about their finances broadly when deciding to stay at home, and consider how difficult or easy it may be to return to a viable career track down the road.

Even women who continue to work full-time for the same employer for a couple of years after having a child see a drop in earnings of 14 percent, but professional women who take time off to raise children often see a much steeper “mommy penalty,” with female MBAs who take 18 months off reportedly earning 41 percent less on average than male MBAs.

Mistake #3: Ceding control of finances to their spouses

According to retirement studies conducted by Fidelity, while couples tend to make the bulk of their day-to-day financial decisions jointly, women are less likely to be the primary decision makers. When it comes to retirement decisions, men are significantly more likely than women to see their role as being the primary decision maker, and both women and men are more confident in men’s ability to assume full financial responsibility if needed, according to the studies. Meanwhile, Generation X and Generation Y women appear to be playing an even smaller role in couples’ finances than baby boomer women.

The behavioral underpinnings for this control imbalance are many, including women’s generally lower financial literacy and lower confidence in their own ability to managing the family’s finances. Also possibly to blame: Perceptions of finance as a stereotypically male field, where women who are successful are unfairly perceived as less likeable, and a possible financial services industry bias toward catering to men.

But regardless of what’s behind the imbalance, women seeking to improve their long-term financial situation should make an effort to take charge of their finances, potentially with help from financial planners. With roughly half of marriages in the U.S. ending in divorce, and women outliving their husbands by an average of five years, most women end up in control of the family’s finances at some point in their lives, whether they feel prepared for it or not. And the financial implications of life crises are particularly acute for women: In a divorce, for example, more women than men have been found to cut their expenses, sell their homes and take a job or a second job.

To be sure, women don’t do everything wrong from a financial perspective. For example, they’re more likely to participate in their employers’ defined contribution plans and save a larger fraction of their pay, as compared to their male counterparts. However, when it comes to what women tend to do wrong, the three common mistakes mentioned above are worth paying attention to, as they can particularly wreak havoc on finances.