Money Mantras For Women
We live in an era where gender parity is a reality. Yet, there is a need for disparity in the way women approach financial planning. Why this distinction, you ask? Well, as much as equality is appreciated, women do lead different lives than that of men. The circumstances they experience vary from that of men. Thus, situations like gaps in income due to marriage or maternity leave and the higher life expectancy of women must be accounted for when planning finances.
Another important thing to remember is, it doesn’t matter whether you’re single or married with children; financial planning is a good habit for all to practice. Women generally fail to look at their own finances as being separate entities from that of their families. Hence, the onus of financial planning falls on the male members of the family. A by-product of this behavior pattern is a negligible understanding of financial products by women. This can have detrimental effects and thus, women should take an active role in planning their finances.
Let’s take a look at a few mantras’ women can follow when it comes to planning their finances.
Talk about finances with your spouse/family and actively participate in the decision making process. These discussions will help you plan your finances and ensure that you are aware of the family’s financial position.
Don’t make ad hoc investment decisions based on tips and trends. Start with setting financial goals and keep them as the foundation of any money decision you need to make.
Don’t try to save what’s left after spending. It seldom works. Instead, figure out the percentage of income you wish to and can comfortably save every month for the future. Ideally, set a savings target of 15-25% of your annual income. This will ensure that you not only indulge but can also save for your future.
Set up a contingency fund, wherein you save 3-6 months of expenses, to deal with unexpected circumstances. Even if you have no dependents, this is good practice to observe.
If your employer isn’t providing you with tax benefits, consider monthly tax saving in ELSS (Equity Linked Savings Scheme). This will not only help you save tax but also create a substantial corpus over a long period of time as compared to other Tax Saving Instruments.
Learn to make the distinction between good and bad loans. Good loans include home loans (which are long-term in nature) because the investment rate of return will always be higher than the interest you pay. Bad loans include personal and credit card loans because they tend to be very expensive due to higher interest rates.
Listen to your body and destress when you feel the need to. Make the right choices with respect to Insurance. Get Life Insurance with a term cover of a sizable amount and health insurance for family protection.
Keeping a lot of money idle (in bank accounts) is never a good idea. You have to make your money work for you. Instead of sticking to more traditional options, see how other investment avenues like Mutual Funds can work for your financial goals. Ideally, invest through a Systematic Investment Plan (SIP). This will ensure money gets automatically debited from your bank account and gets invested in a Fund of your choice.
While making investment decisions, fear or greed can get in the way of meeting your goals. Understand your behaviour and focus on your goals and you’ll seldom go wrong.
Avoid relying heavily on friends and family members. A GOOD certified financial planner should help you structure your investments based on your financial goals, understand how much risk you should take, make a financial plan and help you stick to the plan (especially in tough times).
Each and everyone needs to plan for their financial future. Learning how to effectively manage your money and make optimum use of available resources can help you make the most of the pay checks and approach your financial choices with confidence. Take a long-term approach to managing your finances and most importantly, understand that it’s never too late to begin investing towards your goals.
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