In today’s rapidly changing world, achieving financial security is a crucial goal for everyone, regardless of gender. However, women in India often face unique challenges and responsibilities, making it even more essential for them to take control of their personal finances. Here is a look at why managing personal finances is important for women, as well as a roadmap to help them achieve a financially secure future.
The importance of managing personal finances
Financial security is the foundation for a fulfilling and stress-free life. It empowers individuals to achieve their money goals, secure their family’s well-being and be prepared for unexpected twists in life. Financial independence in turn is a powerful tool for women’s empowerment. It provides them with the freedom to make choices that are aligned with their aspirations and values, whether it’s pursuing a career, starting a business, or investing in education. When women are financially aware and active in making investment decisions, they play an equal role in family’s financial decisions. This not only ensures that their voices are heard but also contributes to better financial outcomes.
Further, with the Covid-19 pandemic, we all have understood that life is unpredictable. Whether it’s a medical emergency, the loss of a spouse, or other unforeseen circumstances, being financially secure can be a lifesaver. Women who understand and can manage their finances are better prepared to face such challenges.
Strategies for women to achieve a financially secure future
Let’s delve into some practical strategies that can help women pave the way for a secure financial future: Set clear financial goals: Begin by defining your financial goals. These could include saving for retirement, purchasing a home, funding your children’s education, or starting a business. Having clear objectives will guide your financial decisions. Seek advice from a financial planner – these professionals specialise in creating comprehensive financial strategies, navigate complex investment options, and optimize tax planning for individuals. Embrace financial literacy: Financial literacy is the cornerstone of effective financial planning. Educate yourself about investment concepts, tax implications, and retirement products. Knowledge empowers women to make informed decisions, ensuring they don’t outlive their savings. Budgeting and saving: Create a monthly budget to track your income and expenses. Allocate a portion of your income to savings and investments. Even small amounts, when saved consistently, can grow into a substantial corpus over time.
Emergency fund: Build an emergency fund that covers at least six months of your living expenses. This fund will provide a safety net in case of unexpected financial setbacks.
Invest wisely: Make your money work for you by investing in a diversified portfolio of assets. While self-education is valuable, seeking guidance from a professional financial planner, can add a layer of expertise to financial planning.
Insurance: Protect yourself and your family with appropriate insurance policies. Health, term life, and disability insurance are essential to safeguard against medical expenses and loss of income due to unforeseen events.
Retirement planning: Procrastination has no place when it comes to retirement planning, especially for women. The earlier one starts planning, the more time there is to build a substantial retirement corpus. Create a comprehensive retirement plan that outlines financial goals, investment strategies, and contingency plans. A proactive approach ensures financial independence even in the face of unexpected challenges.
Reduce debt: Prioritise paying off high-interest debts, such as credit card balances and personal loans. Reducing debt frees up more of your income for savings and investments.
Education and skill development: Continuous learning and skill development can lead to better career opportunities and income growth. Consider investing in education and training that align with your career goals.
Navigating sudden career breaks
Women often face career breaks due to family responsibilities, maternity leave, or personal reasons. These breaks can disrupt financial stability, but with careful planning, they need not be detrimental to your long-term financial security.
Planning for maternity leave: If you plan to take maternity leave, it’s essential to prepare financially. Save for the additional expenses associated with childbirth and childcare, and understand the maternity benefits provided by your employer and the government.
Emergency fund: An emergency fund is especially crucial during career breaks. It can cover your expenses and prevent you from dipping into your long-term savings or taking on debt during a break.
Explore flexible work options:
Look for employers or roles that offer flexible work arrangements, such as remote work, part-time positions, or freelancing. These options can help you balance career and family, and also provide an opportunity to stay updated with what is happening in the industry.
Plan childcare costs: Childcare is a significant expense for working mothers. Explore cost-effective options and factor them into your budget and financial planning.
Continual learning: Use career breaks as opportunities for skill development and staying up-to-date in your field. Online courses and certifications can help you remain competitive.
Return to work strategically: When you’re ready to return to work, plan strategically. Update your resume, seek guidance from mentors, and consider reaching out to companies that offer returnship programs for women re-entering the workforce.
Achieving financial security is a journey that requires planning, discipline, and knowledge. Women in India face unique challenges, including career breaks, which can disrupt their financial stability. However, with a clear understanding of the importance of managing personal finances and a commitment to financial planning, these challenges can be overcome.
Women who take control of their finances not only secure their own future but also empower themselves and contribute to their families’ well-being. Let’s break the taboos and pave the way for a more financially secure and empowered future for women in India. By following the strategies outlined in this guide, women can navigate the complexities of personal finance and achieve the financial security they deserve.
(The article is written by Krishan Mishra, CEO, FPSB India)