Even as women excel in all areas of life and become increasingly independent, their financial planning still takes a back seat and is handled primarily by the men of the family.
We recently conducted a study on women and their financial power, which revealed that 51% of women in the country either do not invest at all or are unaware of their investments.
Yes, the number sounds like an echo. One we strive to change in the coming years.
Women have differing financial needs – differentiated earning potential, career peak, career breaks, longer life expectancy, different approach and mindset towards financial planning.
Thus, it is essential for women to take charge of their finances through smart planning and investment best suited to their needs. It may seem like a frightening step, as the Chinese philosopher Lao Tzu said, “A journey of a thousand miles begins with a single step.”
Here are some of the main points a woman can follow to take charge of her own personal finance:
1. Be aware of your profits and expenses:
The first step in the journey to becoming financially fit and independent is to understand your financial patterns. This means that it is not only necessary to be aware of your earnings but also to be aware of your significant expenses.
Use an online journal or spreadsheet to jot it down and understand your financial behavior. Make sure to write down all the details as they will help you further in making decisions accordingly.
2. Set smart financial goals for your future:
Set financial goals from the start. Without an end goal in mind, any activity seems pointless. Whatever your needs and aspirations are, write them down and then work on finding a way to achieve them.
It is very important that these goals are SMART goals – specific, measurable, achievable, realistic and time-bound.
Set aside at least 20% of your monthly income to achieve these goals. Once you set goals with timelines, plan your short-term and long-term investments.
3. Building an emergency fund:
An emergency fund can help a person stay afloat in a financial crisis like the current one, this fund should be at least six months away from your expenses and be available quickly and easily when needed.
The money should be liquid because you will need it in the event of an emergency. This fund can be set up with a savings account or with liquid and arbitrage funds that target better returns.
4. Giving priority to life and health insurance:
Always make sure you and your family are protected with the right insurance. Uncertainty doesn’t knock on the door, it’s sudden and turbulent – emotionally and financially!
Our study reported that 58% of women did not have health or life insurance in their name. Therefore, cover yourself and your loved ones with health and life insurance to ensure the financial stability of your family!
5. Planning your retirement fund:
Retirement at some point is almost inevitable! Your expenses will continue, but the income will stop, so you will need a good financial cushion to support you through your dream retirement!
We found that only 2% of women invest in retirement. It’s important to start early, start small and start investing in assets that benefit from the power of structure, such as mutual funds.
6. Never ignore your taxes:
Plan for taxes early in the year, so you don’t end up making fruitless last-minute decisions.
Apart from this, you can take advantage of the various tax deductions available and save your taxes. This will help in better planning your financial goals.
7. Stay informed and updated:
Success cannot be achieved overnight, and the same is true of financial freedom. Keeping up with trends and terminology can help you expand your knowledge and avenues.
Despite the resources that qualify us women to bridge the gap between women and finance, we have noticed that 93% of women do not access any financial investment related website.
Therefore, constantly updating your knowledge will help you feel more confident and adapt to the financial world and where to invest your money.
Take small steps, and draw up a financial plan with all your financial goals and when you want to achieve them.
Read, learn and ask other women about their financial planning journeys. Start small but start with a SIP (Systematic Investment Plan)! Remember that financial independence is an essential life skill that every woman must be equipped with to be truly independent.
(The author is the founder of LXME – India’s first women’s financial platform)
(Disclaimer: Recommendations, suggestions, opinions and opinions provided by experts are their own. These do not represent the views of the Economic Times)