High-income women have unique financial challenges and opportunities. While earning more opens doors for greater wealth-building, it also presents new financial pitfalls. As a financial planner, I’ve observed several recurring mistakes that can slow wealth-building or put financial independence at risk.
In this article, we’re covering five common mistakes high-income women make and, more importantly, how to avoid them. Be sure to stick around for mistake 5—it’s a game-changer.
Mistake 1: Holding Too Much Money in Checking or Savings
It’s tempting to keep a large balance in your checking or savings account for the sense of security it provides. But here’s the hard truth: excess cash in low-yield accounts is costing you money.
Why It’s a Problem
Low Returns: The average interest rate on checking and savings accounts is far below what you’d earn in the stock market or other investment vehicles.
Impact of Inflation: Inflation eats away at the value of your cash over time, meaning your money is actually losing purchasing power.
Delayed Financial Independence: Holding too much cash may require you to save more to hit retirement goals, or delay your financial independence date.
How to Fix It
Set a Target for Cash Reserves: Keep 36 months of living expenses in a high-yield savings account for emergencies.
Put Excess Cash to Work: Move extra funds into investments, brokerage accounts, or other growth-focused vehicles where your money can work harder for you.
Mistake 2: Shaming Themselves for Spending Without an Intentional Spending Plan
Guilt overspending is one of the most common money struggles for women. Many women feel they’re “bad with money” when, in reality, they’re absorbing society’s outdated narratives about women’s financial behavior.
Why It’s a Problem
Emotional Drain: Shame creates unnecessary stress and frustration.
Unclear Priorities: Without clear financial priorities, every purchase feels like a mistake.
Avoidance of financial planning: Guilt can lead to avoidance of finances altogether, which halts financial progress.
How to Fix It
Create an Intentional Spending Plan: A spending plan is different from a traditional budget—it’s a way to allocate funds for the things you value most.
Align Your Spending With Your Values: Identify what’s most important to you—whether it’s family experiences, travel, or wellness—and build your spending plan around that.
Ditch the Guilt: Give yourself permission to spend money on what you value most, as long as you’re on track with your larger financial goals.
Mistake 3: Sweating the Small Stuff Instead of the Big Stuff
There’s a pervasive message in the media that small expenses like coffee or avocado toast are "ruining" our finances. But that’s not the big issue.
Why It’s a Problem
Focus on Pennies Instead of Dollars: Obsessing over small expenses (like skipping coffee) won’t create lasting financial change.
Missed Big Picture Opportunities: Major life decisions—like home purchases, car loans, and renovation projects—have far more impact on wealth.
How to Fix It
Focus on Big Expenses First: Housing, car payments, and large onetime expenses matter far more than coffee runs.
Set an Investment Rate: Rather than tracking every small expense, set a percentage of your income to invest—and stick with it as your salary increases.
Make Decisions on the 80/20 Rule: Spend 80% of your financial focus on the big expenses and only 20% on the small stuff.
Mistake 4: Deferring to Men or “Experts” About Their Money
Women are raised with subtle messages that managing money is a "man’s job." This often leads to women deferring financial decisions to male partners, family members, or even underqualified financial advisors.
Why It’s a Problem
Power Imbalance: Relinquishing control of your finances can create unequal power dynamics in a relationship.
Risk of Financial Infidelity: You may not be aware of debt, hidden accounts, or financial decisions your partner makes without your input.
Missed Opportunities: Research shows that women are better investors than men. Studies by Fidelity and Wells Fargo found that women’s portfolios consistently outperform men’s.
How to Fix It
Take an Active Role in Your Finances: Be present in financial conversations, and ask questions.
Challenge the “Expert” Mindset: Trust that you’re just as capable of managing your money as your spouse, partner, or advisor.
Find an Aligned Advisor: If you’re hiring a financial advisor, make sure they listen to you, respect your values, and empower you to make informed decisions.
Mistake 5: Not Getting a Prenup or Postnup
This is one of the most controversial money moves for high-income women, but I’m standing firm on it: every high-earning woman should have a prenup or postnup.
Why It’s a Problem
Risk to Personal Assets: Without a prenup or postnup, assets you’ve built before marriage or inheritances you’ve received can become shared marital property.
Loss of Autonomy: If your marriage ends, you may lose control of assets you worked hard to build.
How to Fix It
Get a Prenup: A prenup outlines how assets will be divided in the event of a divorce. It’s best to have this conversation before marriage.
Consider a Postnup: If you’re already married and your financial situation changes (like starting a business), a postnup can protect your growing wealth.
Keep Assets Separate: If you’re not ready for a prenup or postnup, at the very least, keep personal assets in accounts that are solely in your name.
Summary and Closing Thoughts
Women are often much better at managing money than they give themselves credit for. Society’s outdated narratives about women’s financial acumen cause many to feel unsure, but the numbers don’t lie. Women are often better investors than men, and they have the skills to manage wealth effectively.
Here’s what to remember:
1. Don’t Let Cash Sit Idle: Make your money work for you by investing it.
2. Ditch Guilt: Enjoy your money intentionally, and guilt-free.
3. Focus on Big Moves: Big expenses matter more than lattes.
4. Trust Yourself: You’re just as capable of managing money as anyone else.
5. Protect Your Wealth: Get a prenup or postnup to protect your hard work.
If you’re looking for a financial advisor who will empower you to build and protect your wealth, consider working with Poder Wealth Advisors. We specialize in supporting women, people of color, and first-generation wealth builders. Our mission is to disrupt the status quo, prioritize women’s values, and create a space where your financial dreams are fully supported.
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