Women should plan their finances well enough so that they may not remain dependent on others for accomplishing their financial needs.
Today, women not only manage their household liabilities and family concerns but also their careers. They are at par with men in all financial matters. However, when it comes to creating their own financial planning roadmap, they often take a back seat. However, it is important for every woman to have the drive to invest, save, and create a portfolio which can help achieve her financial goals independently.
Here are some financial planning issues women should keep in mind:
Should understand the concept of financial planning
Women should explore the financial world and plan their finances well enough so that they may not remain dependent on others for accomplishing their financial needs.
Adhil Shetty, CEO, BankBazaar.com said, historically, women have had limited exposure to the financial world and fewer chances to learn. This was amplified by the perception that finance is a dry, complex subject that requires too much study. Moreover, between managing the pressures at work, and taking charge of their home and family after office, women are left with little leisure time. All these factors have held back women from taking independent financial decisions,” he said.
However, women are slowly realising that not only do they tend to be the most severely affected because of incomplete financial planning, it is also more likely that they may face financial hardship in their old age as life expectancy is increasing.
Participation in financial decisions
Women, who are the real managers’ of their family should take responsibility of managing their household budget to run the family expenses smoothly. Shetty said that families, too, are realising that women, who are at the center of the family, are more capable of taking better financial decisions for themselves and their families. This has resulted in more women taking an active interest in their finances. “The good news is that the tide is turning; it may be slow, but in time, women are turning out to be decision makers in all spheres of life, including their own finances,” he said.
Making your own financial portfolio
Knowledge of different investment avenues, savings, and expenses is important. A separate personal finance portfolio will prepare women to face financial challenges independently. This will help them to understand various implications related to gains and losses and outcomes related to financial goals. Achieving one’s goal will also give them the confidence to get them prepare for the next one.
“Fortunately, there are digital financial planning tools available that make the process easy to understand and implement. By using such tools, women can contribute to their family’s financial well-being by saving in a structured and efficient manner. This helps in allocating savings to financial assets like debt and equity, which deliver higher returns than traditional assets like gold and FD’s,” said Vaibhav Agrawal, Head of Research & ARQ, Angel Broking Pvt Ltd.
Save money for emergency need
Not only investments but savings are also very important to create an emergency fund and maintaining an adequate emergency fund should be one’s top priority to tackle unfortunate circumstances like a job loss, divorce or death of a spouse. Ideally, one should maintain at least six months of your mandatory monthly expenses. “Financial planning helps in saving for life’s goals such as a home, a vacation or even for a rainy day. However, saving for financial goals can be a complex task,” said Agrawal.
Plan for a longer retirement
What if a woman lives more than her spouse? In such case, it becomes important for women to be In-charge of their finances so that they are able to handle things on their own. Therefore, they should start thinking that someday or the other they might need themselves to manage their own life. And it would be best if one starts planning their finances as early as possible.“Statistics show that, on an average, women live longer than men, earn lesser during their lifetime, and have shorter careers. Moreover, women tend to focus on meeting the immediate, short-term, and long-term financial requirements of their family as opposed to saving up for the future. Because of the differences in the earning patterns and priorities that women set for themselves, their finances should be managed in a different manner,” said Shetty.