Spotlight:This Women’s Day, don’t do different things but do things differently
Learn all about effective money management rules to get a step closer to a financially secure life.
Wednesday March 08, 2023,
4 min Read
In recent years, women have increasingly been taking center stage across various spheres of life. But when it comes to financial planning among Indian women, as per a recent DSP Winvestor Pulse 2022 study, 67 percent of women consulted their spouses when it comes to investment decision making.
It shouldn’t be so difficult for women to take the lead in making personal investment decisions. That’s why experts fromhave put together some basic, yet effective money management rules that can help you get a step closer to a financially secure life. Spending some time to understand the basic principles of investing can help you independently apply them to your individual circumstances.
First and foremost - Invest in your professional development
This can mean upskilling or converting your hobby into a full-time gig. Having a primary source of income is extremely important. This income will help you secure your future and plan your goals effectively.
Only earning is not enough! Following saving discipline is equally important
As your income grows, it is crucial that you take control of your money. You can start by simply mapping out your income, expenses, and savings every month. This will help you figure out how much you are spending and ways to increase your savings. You can set a savings benchmark for yourself - Saving at least 20-30 percent of your net monthly income can be a good starting point. If you can save more, that can greatly contribute to your future financial security.
Build an emergency fund
Any unforeseen expense can create a big hole in your savings. An emergency fund can take care of such big expenses by keeping your savings intact. A simple rule of thumb is to have at least 3-6 months of expenses kept aside as an emergency fund. You could park such savings in an FD or short-term debt funds such as liquid funds. Liquid funds have the potential to deliver returns higher than a savings account with complete liquidity.
Convert your savings into investments
You can be a pro in saving money, but only saving is not enough. With the inflation rate higher than the savings account interest rate, keeping your money idle in a savings account will result in a drop in the value of your money. Investing in products like mutual funds via SIPs can be a great start. SIPs help you automate your investments and have the potential to deliver higher returns in the long run. A simple yet effective way to start investing is to start a SIP in a large-cap or diversified fund. These funds can help you build substantial wealth over the long term.
Ensure that your financial plan suits your goals
Women may have different life goals at different stages of their life. For example, a new mother may decide to take some time off from work. Or a young professional woman may decide to take a sabbatical for further education. Whatever life stage you may be at, it is important to align your investments as per your goals. Do not hesitate to take the help of an expert to streamline your investments in line with your goals and review them regularly.
Invest your time to learn about investments
Financial freedom comes with knowing which financial product is right for you and which isn't. Understanding the basics of financial markets and knowing where to invest will help you make an informed decision. Remember, taking a calculated risk when it comes to investing can go a long way in creating wealth. These basic building blocks will create a solid foundation for your financial independence journey.