Financial planning: Ladies, it is time to step up and take charge

Women who started working several years back, toiled to make a mark for themselves but got little support from the society. Over the past decade, with increased access to education and the resulting growth opportunities, we have come a long way.

It would be naive to say that we have overcome all the critical issues but there are a good number of women like me (living in big cities or are from middle- and upper-middle-class families) who are lucky to have equal opportunities.

We are living our lives to the fullest with our fast paced careers - something our previous generation could have hardly imagined. But, can we do more?

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Women are great with money; we really know how to save. Some of us are also proactive in deploying this money to make more money today.

This could be in new-age instruments like mutual funds or in more traditional avenues such as real estate/gold. Taking the first step is great, but is it enough?

Can we do more without breaking a sweat?

When we plan that Europe trip, we want it to be perfect. We ensure we choose the experiences that matter - spend hours on researching, planning, and ultimately executing that vacation. In fact, it is this journey and not just the actual vacation that makes travel exciting for a lot of us.

But when it comes to our financial goals, do we spare even a weekend thinking about what we want to achieve, when we want to achieve it, and how do we plan to go about it? Why something so critical to our financial independence, takes a backseat?

Whether you are single, soon-to-be-married, divorced or married, you need to take equal responsibility for securing your future and saving for your goals. You need to be prepared for any situation in the future - supporting parents, being a single woman/mom, etc. Women’s Day or any other time of year, it is time to step up and take charge of your financial future. Here are my two cents.

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Spend a few hours every weekend over the next month to do this:

Week 1: How prepared are you for an emergency?

You need to have an emergency fund with 6-12 months of your fixed expenses to deal with an exigency like job loss, medical emergency, etc. This money should be easily accessible. Debt mutual funds/fixed deposits can be used to park your emergency money. In case, you have dependents, you should also consider buying adequate life insurance that will provide income replacement, in case of untimely death.

Week 2: Are you saving your tax right?

Go through your salary slip and understand how much tax you need to pay, after accounting for the EPF/HRA/standard deductions, etc.

Once you know the amount of tax you can save, invest in the tax saving options that not just help you save tax but help create wealth too - like tax saver mutual funds.

Most organisations ask you to declare your investments at the beginning of the financial year. A good idea would be to start investing early and split these investments across the year so that you don’t have to struggle with investing a lump sum at the last minute.

Week 3: Is your healthand your family’s insured?

You are likely to be covered by your company’s group insurance policy. Evaluate the benefits based on your medical history and how well it covers your dependents. Consider buying a policy that covers you even after your retirement.

Week 4: Budgeting is key

Against the usual advice by financial planners, I use a credit card for all my expenses. It not just earns me points and access to lounges, it also ensures I don’t need to maintain any bank balance beyond some emergency cash. But I also, without fail, clear all dues every month and enter all my expenses in an Excel sheet bucketed under categories like entertainment, shopping, etc. A quick look at the sheet at the end of the month and I know what I have gone overboard with. It has worked well for me so far, and a similar exercise might for you too.

Week 5: Are you saving for your retirement?

A very important goal, one that you have no choice but to prepare for. How many years until retirement, how much will you need, how much have you saved, have you factored in inflation, have you included medical expenses? Might seem daunting but preparing for retirement is crucial and the sooner you start the better.

Tip: Break it down to an amount you can set aside every month. There are calculators available online to help you do this efficiently. Equity mutual funds are the preferred mode of investing when it comes to long-term goals like retirement.

Ultimately, there is no ‘one-size-fits all’ approach to your finances and you must spend time and seek professional help to personalise your finances according to your goals and life stage.

 (Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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