Subscribe for real-time financial insights on Trade Target’s WhatsApp Channels
In today’s world, women are breaking old stereotypes and excelling in various areas, from managing households to leading businesses. While in the past, women often weren’t involved in financial matters, things have changed. Women are now becoming financially independent through different careers.
Women need to manage their money well, whether they’re married or not. Even though women have made great progress in many areas, they sometimes lag behind in financial planning. To fix this, women need to challenge stereotypes and learn more about managing money. We’re past the time when people believed men and women had set roles.
Nowadays, men and women are equal partners in work and society. But when it comes to investing and money, many women still rely on men for advice. While women are good at saving money, they often struggle when it comes to investing. Saving money is very important, but investing in different things is also needed to make sure your money grows over time and keeps up with the rising costs of things.
Women aren’t just caregivers anymore; they also earn money, contribute to society, and help the economy grow. Many women earn money alongside their partners or even as the primary earners, so planning finances well is very important.
This article aims to give women simple and valuable tips about financial planning at every stage of life. Today, we are changing the way we think about money.
We’ll talk about 10 easy money tips for women to follow. If you’re a woman who wants to start investing and join other women investors, here are seven simple things you can do to get ready.
Keep reading!
1. Know What You Own and Believe in Yourself
In many cases, women aren’t always well-informed about the insurance and investments that their husbands handle. Sometimes, men don’t share these details, and even if they do, women might not show much interest. This needs to change because the recent pandemic showed how important it is for everyone in the family to know about the money and plans in case something happens to the person who earns the most.
There have been cases where the person who earns money for the family passed away, but the family didn’t know about the insurance money they could claim. This is a big problem.
So, here’s where you can start your journey to understand finances better. First, talk to the person in your family who makes financial decisions and learn about all the investments and insurance they have.
We noticed that sometimes women feel less sure about money matters than men. But remember, this doesn’t mean men are always better with money. It’s just that many women might not feel as supported when it comes to learning about finances and might be unsure about where to begin.
To fix this, families should talk more openly about money matters. Women should feel encouraged to be part of these discussions and have access to resources that can help them learn about finances. When women can confidently take part in money decisions, it makes families more secure, prevents missed benefits, and helps everyone be financially strong.
2. Set Your Financial Goals
First things first, to handle your money smartly, you need to set clear money goals. These could be things you want to do soon or things you dream about doing later. Having these goals will help you know how much money you need to save or use for special things. And guess what? You need to pay off any money you owe (debts) so you can have a nice stash of money for yourself and your loved ones.
Now, about those goals. You might want to study more, get married, travel, have a baby, help your own kids, buy a home, or make your loved ones’ wishes come true. Using the 50-30-20 rule makes things easy. It means you smartly divide your money: 50% for important stuff you need, 30% for saving and making your money grow, and 20% for enjoying life and having fun.
Before you start investing, it’s important to have two safety nets: insurance and an emergency fund. Insurance helps you if something unexpected happens, and the emergency fund is like a cushion for surprise bills or when you don’t have a job for a while.
Once you have these in place, you can use some of the money you have left to invest. Investing means using your money to make more money over time. There are different ways to do this, and choose the ones that match your goals.
When we put these steps together, you are on your way to managing money wisely and making our dreams come true!
3. Keep Track On Your Expenses
To keep track of your spending in a well-organized way, start by sorting your expenses into different groups like bills and fun stuff. Use a notebook, a computer, or an app to write down everything you spend money on, even small things. Also, remember to write down how much money you make.
At the end of each month, look at what you wrote down to see where your money went. Make a plan for the next month by deciding how much money you’ll spend in each group and how much you’ll save. Keep checking how you’re doing and change your plan if you need to. This way, you can manage your money better and reach your goals while still enjoying yourself.
4. Start Smart Investment
To secure your financial future, it’s not enough to just save money – you’ve got to be savvy with your investments too.
Begin by setting clear financial goals and factoring in the rising cost of living, so you know exactly how much you’ll need. While saving is important, investing is the secret weapon against the money you save losing its value over time. It’s like making your money work for you. Think of your investment portfolio as a mix of different things, like stocks and bonds. This way, if one thing doesn’t do well, the others can balance it out and help your money grow.
If you need the money in the short term (within 5 years), consider safer options like fixed deposits and debt mutual funds so you don’t risk losing it. But for longer goals, like more than 5 years away, think about investing in things like equity mutual funds that can give you better returns over time.
If you’re just starting, try index funds with as little as ₹500 per month to get your feet wet and understand how things work. This smart approach will help you build a solid financial base and get closer to reaching your big goals.
5. Build an Emergency Fund
Financial planning is essential, and a critical aspect of it is establishing an emergency fund. This fund is like a backup plan for unexpected expenses, like medical emergencies or unexpected job losses, ensuring you remain financially stable during challenging times, including the current situation. It’s a good idea to have enough money saved up in your emergency fund to pay for your living expenses for at least six months.
Accessibility is key, so your money should be easily and quickly available when needed. To ensure this, opt for liquid assets, such as those in a regular savings account. If you’re looking for potentially higher returns, you can consider liquid and arbitrage funds, but always prioritize accessibility and avoid high-risk options.
By following these steps, you’ll be well-prepared to handle financial emergencies without any worries.
6. Golden Years Ahead: Make a Realistic Retirement Plan
Besides setting up a rainy day fund, it’s crucial to consider building a realistic retirement plan. Your early 20s and 30s are incredibly productive years, making it the ideal time to maximize your savings.
Start by exploring various retirement options and selecting a plan that suits your needs. One excellent choice is an employer-sponsored retirement fund, which offers systematic savings that can benefit you in the long term.
Remember, retirement is almost inevitable; your expenses will persist, but your income may cease. So, having a robust financial cushion is essential to enjoy your dream retirement!
Surprisingly, only 2% of women are currently investing for retirement. Starting early and starting small are the keys to success. Begin by investing in assets that harness the power of compounding, such as Equity Mutual Funds.
7. Never Ignore Your Taxes
Managing taxes can be challenging, but understanding how to save on taxes is essential. If you’re a working woman, you should be aware that salaried individuals like you can benefit from tax deductions of up to ₹1.5 lakh in a year under Section 80C of the Income Tax Act. To reduce your tax liability, consider options like opening a National Pension System (NPS) account, investing in a Public Provident Fund (PPF), or opting for an Equity-Linked Savings Scheme (ELSS).
It’s wise to plan your taxes early in the year to avoid last-minute, hasty decisions that may not yield the desired results. Even if you’re not a working woman, these tax-saving strategies can be valuable for managing the taxes of other family members.
8. 58% Of Women Have No Health Or Life Insurance
A life insurance policy offers many benefits, including financial security for your loved ones, helping you save on taxes, and giving you peace of mind. It’s a crucial investment for everyone, regardless of their income or net worth. The future is uncertain, and we cannot predict what tomorrow may bring.
So, life insurance should be one of your top priorities, especially if you’re just starting your career. Remember that life doesn’t come with any guarantees, so it’s essential to consider the financial needs of your family.
While term insurance is well-known and recommended, there are various life insurance plans to choose from. Make sure to select a plan that suits your needs.
It’s equally important for women in the 21st century to take responsibility for their family’s well-being. Ensure that every member of your family has both life and health insurance. A Life insurance is like a financial safety blanket, helps with tax savings, provides a sense of security, and offers peace of mind.
The research indicates that 58% of women have no health or life insurance in their name. To secure your family’s financial well-being, ensure you have sufficient health and life insurance coverage.
Remember, uncertainties can hit without warning, causing emotional and financial disruption. Protecting your family with insurance is a responsible step towards securing their future.
Happy investing and thank you for reading!
Disclaimer:
This website content is only for educational purposes, not investment advice. Before making any investment, it’s important to do your own research and be fully informed. Investing in the stock market includes risks, and you should carefully read the Risk Disclosure documents before proceeding. Please remember that past performance doesn’t guarantee future results, and due to market fluctuations, your investment goals may not always be achieved.
