How women can attain financial independence during Covid

Hena Mehta, Co-founder and CEO of Basis, gives some handy hints to avoid untoward financial situations.

We all welcomed 2020 with a ton of excitement. We were at the turn of a new decade, optimistic and starry-eyed. And then, out of nowhere, the world got hit by something no one could have imagined or predicted.

While the last year and a half has been incredibly stressful and heartbreaking, it’s come with a silver lining: the realisation that money is no longer an area that we can ignore, put off to later, or even outsource/delegate to someone else.

Globally, in 2020 alone, women lost more than 64 million jobs, which translated to $800 billion in earnings - according to an Oxfam International report. What’s scarier is that this number doesn’t account for the loss of income in the informal economy.

The need for women to attain financial independence has never been stronger, and here are some actionable ways we can pave our path towards that -

1. Piece together a peace-of-mind fund, with extra cushion

More commonly referred to as an emergency or rainyday fund, this is your backup money in case of unexpected circumstances like a job loss. Typically, at Basis, we recommend 3-6 months’ worth of fixed expenses to be put away in an easy-to-access place (like your savings account).

However, I’d urge everyone to build an extra buffer, and see if you can extend this to 9+ months’ worth of fixed expenses. Fixed expenses are things such as rent, food, utilities, and school fees - things that you absolutely need to cover every month.

2. Insurance: because I love myself, and my family (and my savings)

One hospitalisation could, but need not, break the bank. Look at having at least ₹7.5 -10 lakh of a medical cover. Consider getting an individual health policy, even if you may have some coverage via your employer, or through a family policy, since these may not be enough by themselves. If you’re looking for health insurance for your parents who are above 65, no plan exists. You’ll have to look into this requirement via your savings and investments.

Life insurance often goes ignored for women. If you’re contributing to your family’s finances, you need a term life cover. Start by looking at a plan that offers 10X of your annual income, and work with an insurance advisor to come up with a plan that will be more suited to your needs.

3. Let’s talk money, life partner (and mom and dad)

Money is often not talked about at home. The opacity about money matters, amongst folks who are sharing a home and a life - can be super costly! Do you understand your partner’s or parents’ financial situations? What insurance policies do they have in place? How much debt do they have? What do their investments look like? Transparency around these topics are critical, and these conversations need to be open, honest and frequent.

4. Morbid and uncomfortable, but crucial: Wills and Nominations

Nobody wants to discuss death. I get it. But not having that discussion can cause avoidable financial distress. Ensure that nominations are in place for yours and your family members’ money. Where there are a multitude of financial products, ensure that the wealth is protected with a will. Don’t wait for an emergency to trigger these discussions.

5. Diversified income sources? Yes please!

It’s never a bad idea to have multiple sources of income. Beyond your primary source, consider passive income such as interest from your investments, dividends from stocks, etc.

The impact from the pandemic has taken a particularly hard toll on women, and now, more than ever, we need to get our money act together - and seek autonomy and control over our financial decisions.

Fundamental money tips such as setting up your longterm investments, not taking on more debt than you can afford, and keeping aside some liquidity for dire situations - are more crucial now than ever before.

To end on a lighter note, don’t forget to keep aside (and utilise) your happiness and indulgence funds every month! Here’s to a less stressful 2022 and beyond!

Edited by Anju Narayanan

(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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