5 financial planning tips for women
5 min read • Updated: February 13, 2024, 6:57 PM
To become financially independent, women must engage in investment planning. It will assist in achieving objectives and financial security in addition to helping you to save more.
- Investment planning is a crucial exercise for women to achieve financial independence.
- Not only will it help you save more, but also help you achieve your goals and financial security.
Financial independence plays a pivotal role in empowering women. Whether you are single and professionally growing, a co-earner supporting the needs of your family, or a successful entrepreneur, financial planning is the cornerstone of economic independence.
With an increased number of financial services available and an ever-growing measure of women earning, it’s a natural progression for women to better evaluate their financial standing and improve decision-making.
However, financial inclusion for women is still an area that needs much attention. According to a study published by the Observer Research Foundation, one in every five Indian women lack access to formal banking facilities. Another key issue faced by women addressed in the same study is the lack of confidence when it comes to financial matters. 21% of urban women documented consider themselves bad at managing their money.
Let's take a look at 5 simple steps that can help you plan your finances and secure yourself -
Setting goals and planning
Goal setting followed by impeccable planning are prerequisites for any facet of life, including managing your finances effectively. It is imperative to understand that well-planned and regular investments can help you build the life you envision for yourself and your loved ones.
Identifying primary, secondary, and tertiary goals and planning your finances accordingly can help you accomplish milestones and key moments in life. It could be a much-needed vacation to Bali, or even the desire to buy a house - start by penning down your goals.
This exercise will not only help you visualise what you want from life but also perceive the goal with much clarity and sensitivity to time.
Define your budgets
Now assuming you earn a salary, regardless of how much it may be, budgeting will give a real estimate of the expendable capital you have, the debts you need to clear, and the expenses you incur.
Budgeting can be a real stressbuster since you won't have to function in ambiguity or ask yourself - “Where is my money going”. Penning down your income and expenses will help you derive clarity of thought and better assess where funds can or need to be allocated.
The 50/30/20 can help you structure your finances by creating a framework. Here, 50% of your income is dedicated to needs, 30% to wants, and 20% to investments, savings, or loan repayments.
Now, this framework is not a one-size-fits-all solution, especially if you’re crippled with debt. Be wise, think twice and allocate funds where needed the most.
Learn to save
Saving is one of the most basic and controlled ways of achieving financial independence. A survey conducted by YouGov Millennial Survey revealed that millennials earning a monthly income of Rs. 75,000 were able to save 20% of their salary. In the group of those earning below Rs. 30,000, only a tenth of the respondents were saving anything at all.
Saving is a principle we receive as an inheritance from our parents. Whether through piggy banks, ‘gullaks’, or kids' accounts, putting money aside for a rainy day is part of the Indian mindset and the prudent abide.
Make wise investments
Now that saving will help you accumulate a healthy sum every month, learning to identify profitable investments is the next step. This will ensure you put your money to good use. Investing is a judicious practice and imperative to achieving financial freedom and building wealth.
Consider the following investment options
National Pension Saving Scheme NPS is a government-introduced scheme that helps you in collecting funds for your retirement. Under this scheme, your savings will be invested in a combined portfolio that includes corporate bonds, equity, liquid funds, fixed financial instruments and government bonds. The minimum investment you need to make in a financial year is ₹6,000.
Life Insurance A common investment option that not only saves your taxes but also protects your loved ones in the case of an unfortunate event. Life insurance is an investment you should consider especially if you have dependants in the family. The sooner you invest, the lesser the premium you have to pay.
Mutual Funds Most apt for women a with risk-taking appetite, mutual funds can be a great instrument for diversification. If you're unsure, start small. Begin with Systematic Investment Plans (SIPs), which are great for long-term investments and affordable.
Financial planning is the roadmap that gets you to financial independence. It can help women be prepared for uncertainties and equip them to achieve all that they aspire to. In case you are wondering when the best time is to start your financial journey, there is no time like the present. The longer your money stays invested, the will be sweeter your returns.