Financial Planning Tips for Women
Do you know the difference between a woman born in the 1960s and a woman born in the 1990s?
A woman born in the 1960s dreamt of running a business or having a full-time career. Women born in the 1990s had similar dreams. The difference is that women born in the 1990s knew they could achieve all their dreams.
The era when marriage was the sole means for a woman to secure her financial stability has faded into the past. In the present times, many women are shattering stereotypes daily.
They are assuming influential roles within their homes and in the corporate sphere. They have the freedom to make decisions as they have achieved financial independence or are on the path of it.
However, with freedom comes responsibility. Hence, women must refine their financial literacy and master money management. Financial literacy has the power to empower women. It can provide women with a profound sense of security and help with savings and investments for the future.
Let us understand why financial planning is important for women.
Well, the answer lies within the question itself.
Why shouldn’t financial planning be important? It’s a life skill. Just like communication and decision making, etc., financial planning is a life skill that everyone should have.
Financial planning 101
Here is a list of things you can pursue to ensure you are managing your finances well:
Step 1: Start by assessing your financial situation
Financial planning aims to achieve financial independence, which comes from financial literacy. Before you do or plan anything, take a thorough inventory of your existing assets, liabilities, expenses, and cash flow.
Start by checking your household, living & lifestyle expenses. You can further evaluate your current tax situation and have a good understanding of your savings, investment & debt.
You must also take into account if you have any big financial expenses that you are planning to undertake in the next 5 years. This can include planning a wedding or buying a property.
Step 2: Set your Financial Goals
Once you have a report card of your expenses you can set your financial goals. Define how much money you are going to set aside to save and invest, and how much you are going to spend.
Financial goals could include:
- Getting married
- Family planning
- Purchasing a property
- A good education for your children
- Staying compliant with tax rules
- Retire with good savings
Additionally, add an approximate amount that you will need to fulfil these goals.
Step 3: Develop the plan & implement it
Based on your current liabilities, cash flow, and your financial goals, create an investment and debt-clearing plan that works for you. Make sure you take your risk tolerance and values in mind. Planning is easy, but the implementation of those plans can be hard.
Under each goal, you can write how you plan to contribute funds towards it. You can also invest in mutual funds to achieve specific goals as they help to grow your money over time.
Step 4: Monitor and Review
Many people forget about this step or overlook it. Regular monitoring and making the right adjustments are essential to ensure that your financial plans align with your needs and goals. Review your plan at least once a year.
Tips for planning your finances better
Planning your finances is not that difficult. You can start with small tips like starting an SIP in a mutual fund. Once you gain more awareness towards financial topics you can move to buying individual stocks or even investing in alternate asset classes.
Here are a few tips that will make you more comfortable once you start your financial journey:
Allocate a Budget
Your financial planning should include a well-defined budget. Based on your monthly or annual income, plan your expenses, investments, and leisure activities. A good starting point is the 50-30-20 rule: allocate 50% to living expenses, 30% to wants, and 20% to savings.
Create a ‘Rainy Day’ Savings Account
Start saving early and consistently. While you invest and spend according to your financial plans, maintain a dedicated savings account. Set aside a specific amount every month, and refrain from using these funds unless it’s an emergency. This account serves as your emergency fund.
Eliminate any High-Interest Credit Cards
Identify and eliminate high-interest credit card debts promptly, as they can severely impact your financial health. Delinquent credit card payments can harm your credit score and future loan eligibility.
Plan your finances with your family
Take an active role in your family’s financial discussions and planning. Familiarise yourself with your family’s finances, review bills and accounts regularly, and take charge of responsibilities.
Plan your motherhood
Many times, women have to take a step back in their growing careers as they plan their families. You and your partner must plan out maternity expenses in advance.
Plan for Retirement
Take control of your future by planning for retirement early in your career. Invest in mutual funds, PPF, and NPS to ensure a comfortable retirement. Every penny saved today will be invaluable in your golden years.
Use Special Policies for Women
Special policies and schemes exist for women, including lower interest rates on loans, special rewards, and tailored loans for women entrepreneurs.
Explore schemes like the MUDRA Loan, Mahila Udyam Nidhi Scheme, Annapurna Scheme, and Stree Shakti Scheme. Women applicants benefit from reduced stamp duty on home loans and low-interest rates, with special premium rates on health and term life insurance.
If you’ve read this far, you have a checklist of major financial goals you want to take care of. But, getting a tick mark on all the check boxes can be challenging and may seem like a difficult task to meet.
But don’t worry! We are here for you. Floatr is a revolutionary app that helps you plan your budget, map your money goals and invest in smart mutual fund baskets.
You can visit our website today or download our application and get started on your financial journey.