Women’s Day 2019: Steps To Become A Financially Savvy Woman – Axis Direct
Mar 12, 2019 | Source: www.financialexpress.com
Women’s Day: 6 Steps To Become A Financially Savvy Woman
As women play a vital role of leading the financial department in the house, it’s a very important responsibility for the women to know how to save, invest and secure their financial future.
Here are six easy steps to becoming a financially-savvy woman!
1. Take charge of your budget
A budget is a detailed summary of probable income and expenses for a given period. A budget helps to keep track of how much money you allocate to certain areas of your life. This will make you more aware of your spending habits and will lessen your chances of overspending. This will also help you chart a financial goal and channel any spare money towards fulfilling it.
2. Build a contingency fund
Life is unpredictable! A contingency fund helps create a reserve of money that can be easily accessed in case of any sudden unforeseen expenses. These could range from an unlucky accident or an illness requiring hospitalization to a sudden loss of a job. The rule of thumb is that a contingency fund should be at least twelve times of your monthly living expenses. This should be built up over a period by setting aside a percentage or fixed amount every month and kept in a separate account that is easily accessible and liquid if required anytime in case of an emergency.
3. Save for retirement
When you are young, retirement seems a long way off! And that leads to many women putting off beginning to save for retirement. But the truth is that the earlier you start saving, the easier it is to build up a nest egg that is big enough to let you continue to live a relaxed lifestyle post retirement. When investing for retirement, don’t forget to factor in inflation, health costs and the fact that women have a higher life expectancy as compared to men! There are a plethora of options from products like Public Provident Fund (PPF), National Pension Scheme (NPS), and Equity Linked Saving Scheme (ELSS) that give tax benefits as well as retirement plans offered by various reputed mutual fund houses.
4. Invest wisely
“Your money should work as hard as you” this should be the underlying commitment of each woman in India on this special day. She should choose their investment product option after consulting a financial doctor (CFP) by defining short term and long term goal requirements. Do a factual study and earn above the nominal returns by understanding & investing in various products like mutual funds, structured equity & debt products, ETF, etc.
5. There is no easy way
Small investments over time can make money work for you. Do not fall for schemes which offer high returns in a very short time. These are usually Ponzi schemes that can result in your money disappearing overnight! Invest only in regulated transparent & liquid products like mutual funds, and allow for the magic of time to compound growth and generate wealth. Diversify your investments to minimize risk beyond gold & real estate which traditionally has underperformed equity mutual funds in last decade.
Money may not be able to buy happiness, but it allows you the freedom to make your choices without worry about the financial implications! Financial independence allows a woman to be equal in a relationship at home and at work. It gives you the ability to choose to leave an unhappy relationship or an unfulfilling job. It also means that you are an in an even better position to help others. So as we begin this New Year, let your first resolution be to expand your financial wisdom and take the first step to becoming financially independent!
6. Avoid debt
It is easy to fall into a debt trap today. From fancily-worded advertisements to messages offering easy personal loans, millions of people are struggling with debt today. Debt drains away your income in the form of EMIs that come knocking every month! Then there is the trap of late fees, penalties and high interest rates that occur when you fall behind on payments. You should avoid debt for any purchase and rather save up over a period for your purchase! If you are in debt, create an actionable plan to get out of debt earlier!
7. Get coverage
Insurance provides a much-needed financial security for yourself and your dependents. Purchasing a term insurance plan is one of the most important financial tools for everyone, especially women, as it protects us from unforeseen circumstances that are beyond our control. From health insurance to accident insurance, from life insurance to critical illness covers, these take into account risks in different aspects of our lives and help us focus on living our lives stress-free knowing that in case of anything unforeseen happening, the insurance will take care of us and our family!