Inclusion of women in financial matters was less significant in earlier days. However, in the past decade or so, the point of view has changed in India as women are acquiring steady careers and becoming financially independent. Today men and women have equivalent status in our society, both socially and monetarily. While many women are in the driver’s seat with respect to financial decisions at home, there are still some who rely on their father/brother/spouse on money matters, investments, and financial planning.
Here are some thoughts around financial planning for women and a laydown on alternate investments options to help build security and future proofing of finances.
Why do women need financial planning?
- Women in general have lower earnings, unlike their male counterparts, which possibly could reduce corpus for later years of life.
- Due to lack of financial awareness, women are less mindful of the available financial product options.
- In India, the life expectancy of women is more than men, which may create a fund deficit for later parts of life
Some tips for financial planning
- Set monetary goals: One cannot initiate the process of planning if you don’t have proper goals in place. Regardless of whether you focus on short-term or long-term goals, you are unlikely to have any idea on the amount you need to save or contribute without defining/ setting your financial goal.
- Deal with your debt: In case if you have taken any kind of loan to manage your finances, make sure to manage it well, as excess debt can lead to financial disaster. At every stage when there is surplus money, use it to reduce your debt.
- Emergency fund: One of the important aspects of financial planning is setting up a corpus for any emergency or crisis. It is advisable to put aside a part of your earnings every month, so you don’t have to deal with any monetary pressure when the need arises.
- Secure your Life’s worth: Protecting the financial future of your loved ones is the most essential and an indispensable piece of financial planning. Life Insurance provides monetary security to your children and dependant family members in your absence. Insurance is as important to women as it is for men who have an earning of any sort.
- Start saving early: It is advisable to put idle savings in a good saving vehicle. In the present situation, where inflation is on the rise, accumulating funds through savings is important. A good place to start is a Recurring Deposit to inculcate the saving habit. You can also invest in a Mutual Funds SIP, where you can garner attractive returns.
- Tax Management: Managing Tax is certainly troublesome, but very essential. Proper tax planning will help you to understand how much tax you can save in a year. Any working individual should know that salaried people are eligible for tax deduction up to Rs 2.5 Lakhs in a financial year under Section 80C of the Income Tax Act. To save taxes, you can open a National Pension System (NPS), Public Provident Fund (PPF) or put resources into Equity-Linked Savings Scheme (ELSS) or Tax saver Fixed Deposits with a Scheduled Commercial bank.
Women need to make an extra effort to effectively and actively participate in financial planning, whether you are the sole earner or living with a spouse/family. Start thinking EPSIS i.e. Earn-Protect-Save-Invest-Spend and you are on the path to financial independence and a stress-free future!
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