How
to Manage your Finances as a Woman?
.webp "How to Manage your Finances as a Woman?_ichhori.com")
Women in India have been taking huge strides in every
field. They are breaking through the glass ceiling in every industry. It’s been
a major shift for women from managing households to managing businesses. But
with all this development there has remained one thing constant and that is the
financial aspect. It’s still seen as a male domain to manage the finances in
general.
We women
should take financial planning into our hands. And, to ensure financial
independence, women need to learn about finances. Be more confident while
investing because a lack of confidence is their worst enemy when it comes to money.
But it is obvious that women who do not have knowledge about the financial world
would want to make financial decisions only after consulting with those whom
they believe know finance and investments.
This is the first step in managing your finances
and being truly financially independent and it makes you your money’s best
friend. It is critical to be at ease with your finances since women tend to be
the ones who take career breaks – whether it’s maternity leave, for their own
family, or to look after older family members.
Seven
Easy Steps for Women to Manage their Money Better.
· Make
a budget: Since childhood, we have seen our mothers making a budget and
managing the household. They have always managed to save whatever they could
with the limited amount they had. So, we should take a page out of their book
and learn to create a budget and stick to it. To create a budget, you have to
make a list of your incomes and expenses. Create the budget in accordance with
your financial priorities and goals.
· Set
a financial goal: To be at ease with your finances you need to have some
financial goals. This will give you a concrete target to work towards. You
should set both short-term goals and long-term goals. You should be able to
achieve your short-term goal within 1 to 2 years and your long-term goals
should be able to give you financial security. Just make sure your goals are
realistic and are achievable and reaching those goals will push you to work hard.
· Pay
off debt: If you have any debt to your name then you should pay it off or
should make a plan to pay it off. If you have debt, it can have a long-term
effect on your finances. It can stand in your way of meeting your financial
goals and your savings for the future. When you make a financial plan stick to
it and you can avoid falling into excessive debt.
· Start
investing: For building long term wealth investment is the key to doing it. So,
if you invest in something that in long term will generate huge returns. There
are some good investment plans available in the market. You should research all
the plans and choose a sturdy and good plan that will lead to more financial
security.
· Build
an emergency fund: Any sane and financial literate person will build an
emergency fund for a rainy day. But for women, it is more important to have an
emergency fund as women take longer sabbatical due to many reasons. So, make it
a priority to save three to six months of your expenses and some from your
paycheck every month.
· Buy
insurance: An important aspect of financial stability and planning is to buy
insurance. It is important to protect yourself from fraud and against any
health problems, so make sure to get insured. You should insure everything from
your life to your car to your house and to your health. Life insurance and
medical insurance will safeguard you from any financial burden against any
eventualities of life. Make sure your insurance has an endowment plan plus an
investment opportunity.
· Save
for retirement: Sometimes women have shorter careers as compared to men because
women have to interrupt their careers to take care of family. So, it is
important for women to plan for retirement. There are many retirements plans
available in the market so you should choose from one of them and start
investing in it. Try to invest in a retirement plan from early on because the
sooner you save the more money you’ll have after you stop working.
These are the general steps for investment but investing
means different things to different women. Like a single parent shouldn’t
invest the same way a single woman should. And a woman who is in her 20s can
afford to take more risks than a woman in her 40s. So, what is the appropriate
time and age when women should start looking at investments? The answer to that
is that the early you start to invest the better it is and this holds true for
any individual.
Women who are Yong and Single
Being single in your 20s is a lot more different
from being single in your 40s. When you are in your 20s, you have more freedom
to take risks and it is imperative that you begin investing immediately and
consistently if you have just started earning. Along with investment you also
need to have a mix of short and long-term goals. Invest in instruments and plans
that can help you achieve both of the goals without having to take a huge loan
for any big purchases.
Some
of the plans young women can invest in are:
·
Invest in equity
mutual funds (EMFs) via a Systematic Investment Plan (SIP) to achieve your
long-term goals such as retirement.
·
Plus, plan to
invest in insurance. You should purchase a suitable health insurance plan. You
may be young, but unfortunate incidents can strike at any time.
·
And you
should also build an emergency fund full of liquid assets to help you during
emergencies.
For you to achieve any short-term goals, it’s
best to invest in traditional instruments such as:
·
Fixed
deposits (FDs)
·
Post Office Deposits
·
Debt Funds
·
Fixed
Maturity Plans (FMPs).
Another thing you can do is periodically shift
money from your savings account to fixed deposits (FDs) or recurring deposits.
It will guarantee you earn higher returns. And, you will be able to retain liquidity
in case of any emergencies, for any big purchase or for a rainy day.
At a later stage in your life, if you may wish to
own your own home then the focus of your investment should shift towards
retirement savings, you should increase your contributions to your pension
plan, and you should add top-ups to your existing health insurance and other
insurances.
Married and working
Most women have the task of simultaneously
managing their household, looking after their children, and pursuing their job
or career. They will have less time to keep track of everything and make
informed financial decisions. So, your investments will inevitably suffer.
In your financial situation, your
husband may be the primary investor but yours is a double income home. And the
things you need to plan are:
· For your
children’s education till their college
· For your children’s marriage
· For your retirement
·
And, if you
want to buy a house if you don’t already own one.
In this stage, you may want to invest in:
·
A suitable
term insurance plan
·
Continue your
investments in mutual funds that will yield great returns.
·
Women in
India have always been interested in gold. And, gold can be a good investment but
make sure to invest by buying gold bullion or gold funds and ETFs, but never as
ornaments.
If you’re over 40 you may want to invest in:
·
Public
Provident Fund (PPF) and
·
National
Pension Scheme (NPS)
But it might be a good idea to look at other
pension plans too. You must also diversify your investment portfolio across
different asset classes which will minimise your risk exposure. The asset
allocation totally depends on your age, risk profile, and your goals.
Homemaker
For homemakers investing can be a little
difficult as they don’t have their own income. They will try to stretch every
penny from their monthly household budget. So, whatever savings you make should
be invested.
Consider investing in bank accounts, RDs, FDs,
and the like. You can also invest in the post office as they have a monthly
recurring deposit scheme that yields an attractive rate of return. Plus, invest
in gold mutual funds or ETFs using a SIP.
Single Parent
If you are a widow or a divorcee with children,
their responsibility that is emotionally and financially falls completely upon
you. You have to plan for their education and marriage and you will have to
plan for your own retirement. So, you should turn to safe, risk-free investments.
If some women are widowed at a young age you
should think about your retirement plans and know about your spouse’s
investment plans. He might have a generous
term insurance plan, of which they can be the beneficiary. You can proceed to pay off the house loan if
you have a home loan, invest in health insurance for the family, education
planning, and your own life term plan with your spouse’s insurance plan.
If you are divorced and working then you should
invest in
· PPF
· NPS
· And mutual funds.
If you’re a divorcee and receiving alimony, the
criteria for investing shouldn’t be very different. You may want to invest in a
SIP that will suffice just as well. SIP puts aside a portion of your monthly
inflow (salary plus maintenance) automatically.
It’s also essential to build an emergency fund that
will cover at least six months’ worth of expenses
With an increase in your income over the years,
your focus should be more on securing your own future rather than that of your
family. So, you should invest in less risky products and focus on diversifying
your financial portfolio. With this, you must review your portfolio every month
to see if you have any risks and how close you are in accordance with your
financial goals.
References: