Apart from minimal spending and maximum savings, women must be aware of money tools, and have a contingency plan, health insurance, and a pension scheme in place.
A common refrain is that while women excel in different roles, they leave their money to the men. But financial prudence is extremely important for women as they shoulder different expectations and endless responsibilities.
As women juggle different worlds, it makes sense to keep their finances in order, be judicious in the use in the money, and ensure minimal spending as well as maximum savings for the future.
It is interesting to note that women are now taking centre stage in financial decision-making process. While many working and self-employed women are aware of the financial opportunities and benefits available, there are many others who are not well versed with managing financial investments.
Upasana Taku, Founder and Director of MobiKwik, says: “I have had my share of shortcomings when it comes to money management. While I developed the habit of saving very early in my life, I did not have much knowledge of financial planning and management, which is equally important. It is important for an individual to do intelligent financial planning to manage not only the budgets and expenses every month, but also ensure considerable amount of savings on an ongoing basis.”
Here are the top 10 things Upasana believes women should know well, moneywise:
Awareness of various financial tools, knowledge of basic finance
Financial planning is important for all, be it single or married women. Regardless of what stage in life a woman is, it is important for her to have financial literacy and know what she is entitled to, so as to manage money successfully. Even today, a lot of working women often tend to outsource financial planning to other members of their family such as their husband, father or relatives/friends, because of limited knowledge when it comes to financial matters.
I believe that a woman should always be well aware of financial tools and have a basic understanding of wealth management, irrespective of whether she is working or not. It is also equally important for women to get out the comfort zone and start making financial decisions confidently.
Save for the near future and always have a contingency fund in place
It is imperative for every woman to not only manage home financial commitments judiciously, but also ensure savings for the future. They can plan for savings for at least one year of financial commitment and keep the amount in fixed deposits in bank or invest in other financial instruments from where it can be withdrawn easily. This holds true for working women with a steady income flow too.
Women need to save for big-ticket purchases like down payment for car, house etc. Also, one needs to save for any other life goals like capital for starting own business, travelling, pursuing further education etc.
Do not hesitate to take professional guidance to ensure best options for investments. Buying a property in their own name is also helpful for building a secured future.
Ensure proper pension planning; focus on long term
A lot of women, including working women, tend to either miss out on proper pension planning or start very late. This needs to be started at an early age, when they are in their 20s, so as to ensure a better corpus when they grow old. Women must start early and put a good share of their earnings in provident fund, long-term retirement/pension plans or other saving instruments
In our society, we tend to believe that our children will take care of our expenses when we grow old. While this has been the trend for generations, women must ensure a good ‘old age fund’ that can come in handy, in case circumstances are not in their favour.
Today, there are numerous lucrative pension/insurance plans in the market and women should pick and choose based on their requirements and under the guidance of financial planners.
It is important to save for kids’ education
This might not be relevant for young women who are single or have just gotten married, but is essential for women who are married or have kids. Ideally, one needs to plan for this early so that the investment period is long and the returns are high.
Education is set to become more expensive in the coming decades and it’s important to plan ahead to ensure the best possible education for children.
Health insurance is a must
The cost of medical expenses has gone up exponentially over the last few years, making health insurance mandatory. Every woman should ensure that her entire family, including the elders and the kids, have health insurance in place. Aim or a family group health insurance as it offers a range of benefits at a discounted price. It shouldn’t be discontinued at any point of time, even if the health insurance benefit isn’t availed. One pays the same premium for the next many years, while the health insurance amount keeps adding up.
Ensure diversified investments
Traditionally, Indians invest a lot in FDs and in gold. While these are good investment instruments, it is advisable that one takes the help of financial advisors and creates a diversified portfolio of investments to ensure a higher RoI, with investments in small/mid and large cap funds. Also, some funds can be parked in liquid funds so as to enable easy access in case of an emergency.
Banks, insurance offer discounts, incentives for women
Banks offers incentives on savings for women with discounts and special promotions, besides offering incentives on medical tests specific to women’s health and their well being. Similarly, women can also benefit from special medical insurance schemes and premium rates, and customised health needs offered by insurance companies. Life insurance companies also offer special schemes for women, keeping women-centric diseases like breast cancer at lower premium. Women applying for a home loan or car loan get lower interest rates than men. In many states, the government provides exemption to women on stamp duty and transfer duty for sale deeds, gift deeds, and conveyance deeds. The exemption is given only when the property is in the name of a woman. In states that do not provide exemption, small rebates are offered on the percentage of duty charges for women.
Own your own bank account, credit cards, insurance policies
Like men, women too must ensure that they create a separate financial portfolio, irrespective of the spouse. It is advisable for women to have their own bank account, debit/credit cards, insurance policies etc., so that they are self-reliant and do not face issues during troubled times or any untoward situation.
Track spending habits
Women should resist overspending. They should always spend on what they actually need. Also, it is important to keep a track on purchases and spending. This will help in better financial management. One should not keep too many credit cards and should judiciously use them. If properly used and managed, a credit card is an excellent financial tool that facilitates incentives and discounts on purchases. Also, one should avoid falling in the trap of buying many products on EMIs, as this eventually leads to a pile-up of recurring expenses for months. They must save money for down payments for house, car, and other regular financial commitments.
Manage your tax
Managing taxes is equally important for any working women. One should judiciously plan investments to get tax incentives. It is advisable to consult tax advisors who could help in proper filing of tax returns. This becomes more critical for women entrepreneurs, and it is advisable that they hire an experienced corporate tax practitioner so as to ensure that they make the most of all government incentives and schemes rolled out to encourage women entrepreneurs.
To sum it up, financial planning is extremely critical for every woman, irrespective of her relationship/work status or stage of life. Women should start today and make the most of their money, so they can reap the benefits and maximise returns in the long run.