How to Manage your Finances as a Woman?


How to Manage your Finances as a Woman?

How to Manage your Finances as a Woman?

Women in India have been taking huge strides in every field. They are breaking through the glass ceiling in every industry. It’s been a major shift for women from managing households to managing businesses. But with all this development there has remained one thing constant and that is the financial aspect. It’s still seen as a male domain to manage the finances in general.   

 We women should take financial planning into our hands. And, to ensure financial independence, women need to learn about finances. Be more confident while investing because a lack of confidence is their worst enemy when it comes to money. But it is obvious that women who do not have knowledge about the financial world would want to make financial decisions only after consulting with those whom they believe know finance and investments.

This is the first step in managing your finances and being truly financially independent and it makes you your money’s best friend. It is critical to be at ease with your finances since women tend to be the ones who take career breaks – whether it’s maternity leave, for their own family, or to look after older family members.

Seven Easy Steps for Women to Manage their Money Better.

·       Make a budget: Since childhood, we have seen our mothers making a budget and managing the household. They have always managed to save whatever they could with the limited amount they had. So, we should take a page out of their book and learn to create a budget and stick to it. To create a budget, you have to make a list of your incomes and expenses. Create the budget in accordance with your financial priorities and goals.

·       Set a financial goal: To be at ease with your finances you need to have some financial goals. This will give you a concrete target to work towards. You should set both short-term goals and long-term goals. You should be able to achieve your short-term goal within 1 to 2 years and your long-term goals should be able to give you financial security. Just make sure your goals are realistic and are achievable and reaching those goals will push you to work hard.   

·       Pay off debt: If you have any debt to your name then you should pay it off or should make a plan to pay it off. If you have debt, it can have a long-term effect on your finances. It can stand in your way of meeting your financial goals and your savings for the future. When you make a financial plan stick to it and you can avoid falling into excessive debt.

·       Start investing: For building long term wealth investment is the key to doing it. So, if you invest in something that in long term will generate huge returns. There are some good investment plans available in the market. You should research all the plans and choose a sturdy and good plan that will lead to more financial security.

·       Build an emergency fund: Any sane and financial literate person will build an emergency fund for a rainy day. But for women, it is more important to have an emergency fund as women take longer sabbatical due to many reasons. So, make it a priority to save three to six months of your expenses and some from your paycheck every month.

·       Buy insurance: An important aspect of financial stability and planning is to buy insurance. It is important to protect yourself from fraud and against any health problems, so make sure to get insured. You should insure everything from your life to your car to your house and to your health. Life insurance and medical insurance will safeguard you from any financial burden against any eventualities of life. Make sure your insurance has an endowment plan plus an investment opportunity.

·       Save for retirement: Sometimes women have shorter careers as compared to men because women have to interrupt their careers to take care of family. So, it is important for women to plan for retirement. There are many retirements plans available in the market so you should choose from one of them and start investing in it. Try to invest in a retirement plan from early on because the sooner you save the more money you’ll have after you stop working.  

These are the general steps for investment but investing means different things to different women. Like a single parent shouldn’t invest the same way a single woman should. And a woman who is in her 20s can afford to take more risks than a woman in her 40s. So, what is the appropriate time and age when women should start looking at investments? The answer to that is that the early you start to invest the better it is and this holds true for any individual.

Women who are Yong and Single

Being single in your 20s is a lot more different from being single in your 40s. When you are in your 20s, you have more freedom to take risks and it is imperative that you begin investing immediately and consistently if you have just started earning. Along with investment you also need to have a mix of short and long-term goals. Invest in instruments and plans that can help you achieve both of the goals without having to take a huge loan for any big purchases.
Some of the plans young women can invest in are:

·       Invest in equity mutual funds (EMFs) via a Systematic Investment Plan (SIP) to achieve your long-term goals such as retirement.

·       Plus, plan to invest in insurance. You should purchase a suitable health insurance plan. You may be young, but unfortunate incidents can strike at any time.

·       And you should also build an emergency fund full of liquid assets to help you during emergencies.  

For you to achieve any short-term goals, it’s best to invest in traditional instruments such as:

·       Fixed deposits (FDs)

·       Post Office Deposits

·       Debt Funds

·       Fixed Maturity Plans (FMPs).

Another thing you can do is periodically shift money from your savings account to fixed deposits (FDs) or recurring deposits. It will guarantee you earn higher returns. And, you will be able to retain liquidity in case of any emergencies, for any big purchase or for a rainy day.

At a later stage in your life, if you may wish to own your own home then the focus of your investment should shift towards retirement savings, you should increase your contributions to your pension plan, and you should add top-ups to your existing health insurance and other insurances.

Married and working

Most women have the task of simultaneously managing their household, looking after their children, and pursuing their job or career. They will have less time to keep track of everything and make informed financial decisions. So, your investments will inevitably suffer.

In your financial situation, your husband may be the primary investor but yours is a double income home. And the things you need to plan are:

·        For your children’s education till their college

·       For your children’s marriage

·       For your retirement

·       And, if you want to buy a house if you don’t already own one.

In this stage, you may want to invest in:

·       A suitable term insurance plan

·       Continue your investments in mutual funds that will yield great returns.

·       Women in India have always been interested in gold. And, gold can be a good investment but make sure to invest by buying gold bullion or gold funds and ETFs, but never as ornaments.

If you’re over 40 you may want to invest in:

·       Public Provident Fund (PPF) and

·       National Pension Scheme (NPS)

But it might be a good idea to look at other pension plans too. You must also diversify your investment portfolio across different asset classes which will minimise your risk exposure. The asset allocation totally depends on your age, risk profile, and your goals.

For homemakers investing can be a little difficult as they don’t have their own income. They will try to stretch every penny from their monthly household budget. So, whatever savings you make should be invested.

Consider investing in bank accounts, RDs, FDs, and the like. You can also invest in the post office as they have a monthly recurring deposit scheme that yields an attractive rate of return. Plus, invest in gold mutual funds or ETFs using a SIP.

Single Parent

If you are a widow or a divorcee with children, their responsibility that is emotionally and financially falls completely upon you. You have to plan for their education and marriage and you will have to plan for your own retirement. So, you should turn to safe, risk-free investments.

If some women are widowed at a young age you should think about your retirement plans and know about your spouse’s investment plans.  He might have a generous term insurance plan, of which they can be the beneficiary.  You can proceed to pay off the house loan if you have a home loan, invest in health insurance for the family, education planning, and your own life term plan with your spouse’s insurance plan.

If you are divorced and working then you should invest in

·       PPF

·       NPS

·       And mutual funds.

If you’re a divorcee and receiving alimony, the criteria for investing shouldn’t be very different. You may want to invest in a SIP that will suffice just as well. SIP puts aside a portion of your monthly inflow (salary plus maintenance) automatically.

It’s also essential to build an emergency fund that will cover at least six months’ worth of expenses
With an increase in your income over the years, your focus should be more on securing your own future rather than that of your family. So, you should invest in less risky products and focus on diversifying your financial portfolio. With this, you must review your portfolio every month to see if you have any risks and how close you are in accordance with your financial goals.


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