Independence Day 2018: Here's how women can achieve financial freedom

It is important for every individual to be financially independent. Financial independence is the ability to earn one’s own living and make a decision on how one saves, spends or manage money. This applies equally to women in India. Women have issues specific to themselves. Thus, for many of them, careers take a back seat when they enter motherhood or when the domestic needs are more compelling over career goals. What starts as a maternity break for many women, often stretches into a long break in career. Similarly, there can be several other reasons. However, to overcome such phases of life, you need to plan for your financial independence well in advance.

Here’s how every woman can prepare to be financially independent, married or not

Build confidence on managing money

Santosh Joseph, Founder & Managing Partner, Germinate Wealth Solutions says that even today many women are dependent on their male family members to manage their money. This is possibly due to lack of confidence. However, the magic begins when you take charge. “It may be a difficult and bumpy ride in the beginning, but one will learn and even excel at it sooner,” he added.

Bridge the information gap

If a woman is not managing her own money, it’s largely due to an informational gap about how to do it. Most women need to exercise their ability to manage money. We have seen in many businesses and households that women are extremely effective in money management.  The reality of financial independence comes with the confidence to earn and manage monies. “Women need to invest some time to learn, understand and involve themselves in money management issues to become independent for themselves,” said Joseph.

Create an emergency plan

It’s always better to plan ahead for a rainy day. Avoid the concept of being vulnerable in case of an emergency. Plan meticulously and be ready for contingency scenarios.

“You must work towards building your own financial security. Have an emergency fund to see you through rainy days without having to depend on others. Invest for your retirement. This can be a common fund with the spouse for married women or singly for unmarried ones. If getting a higher education degree is on your mind, go for it; start saving aggressively. Seek to invest in the appropriate avenues to achieve each of these goals,” said Amar Pandit, CFA is the Founder of HappynessFactory.in

Prepare a savings budget

Switch to a savings budget from your spending budget. The traditional way of budgeting involves keeping track of where you are spending money. However, such a budget doesn’t motivate you or help you to track savings. So, what you need is a savings budget.

“Decide how much you wish to save from your income every month. Ideally, you should push yourself to save 25-30% of your take-home. Those in careers where you don’t get a monthly pay cheque can fix a percentage of saving from the yearly pay,” said Pandit.

Take help from a financial adviser

Hire a good financial planner to guide you in making a comprehensive financial plan. Women generally are more open than men to seek help. This is a good trait, but may be taken advantage of, so select your advisor well. Pandit said beware of free advice from your bank RM, friends or insurance agent who call themselves financial advisors and guarantee ridiculous returns. “A good planner will focus on your goals and risk behaviour to make a goal based financial plan, and help you stay focused to achieve those goals on time,” he added.

Don’t give up!

Financial independence is a necessity and not a luxury anymore. One may feel insecure, unsure or worried initially. Even if you fail after seeking help from professionals or friends and progress towards effective management, do not panic, have patience and believe in yourself. If it’s not your day today then definitely tomorrow you will succeed for sure. Don’t lose focus or get into self-pity mode, it’s your right to be independent and it’s in your control to be so!