women investors: how women can take charge of their personal finances; here are 7 effective ways

Financial planning, money management and investments have traditionally been male-dominated and male-oriented.

Even as women excel in all fields of life and become more and more independent, their financial planning still takes a backseat and is mostly handled by the men in the family.

We recently did a study on women and their money power, which revealed that overall 51% of women in the country are not investing at all or are unaware of their investments.

Yes, the number resonates like an echo. One that we strive to change in the coming years.

Women have differentiated financial needs: differentiated earning potential, career peaks, career breaks, longer life expectancies, and a different approach and mindset towards financial planning.

Therefore, it is imperative that women take charge of their money through smart planning and investing that best suits their needs. It may seem like a daunting step, to quote the Chinese philosopher Lao Tse: “A journey of a thousand miles begins with a single step.”

Here are some of the key points that women can follow to take charge of their personal finances:

1. Be aware of your earnings and expenses:

The first step in the journey to becoming financially fit and independent is understanding your financial patterns. This means that it is not only essential to be aware of your earnings, but also to be aware of your significant expenses.

Use a journal or online spreadsheet to track it down and understand your financial behavior. Make sure you write down all the details as they will help you make decisions accordingly.

2. Have SMART financial goals for your future:

Set financial goals early on. Without the presence of an end goal in mind, any activity seems pointless. Whatever your needs and aspirations are, write them down and then work on creating a path to achieve them.

It is very important that these goals are SMART goals: Specific, Measurable, Achievable, Realistic and Time-bound.

Set aside at least 20% of your monthly income to meet these goals. Once you’ve identified time-bound goals, plan your investments for the short and long term.

3. Create an Emergency Fund:

An emergency fund can help you stay afloat in a financial crisis like the current one. This fund should be at least six months of your expenses and be quickly and easily available when needed.

The money must be liquid since you will need it when an emergency occurs. This fund can be created with a savings account or with liquid and arbitrage funds that target better returns.

4. Prioritize life and health insurance:

Always make sure you and your family are protected with adequate insurance. Uncertainties don’t knock on the door, they are sudden and upsetting, emotionally and financially!

Our study indicated that 58% of women do not have health or life insurance in their name. So cover yourself and your loved ones with health and life insurance to ensure your family’s financial stability!

5. Plan your retirement fund:

Retirement at some point is almost inevitable! Your expenses will continue, but your income will stop, so you’ll need a good financial cushion to support yourself through the retirement of your dreams.

We found that only 2% of women are investing for their retirement. It’s important to start early, start small, and begin investing in assets that harness the power of compounding, such as equity mutual funds.

6. Never ignore your taxes:

Plan your taxes at the beginning of the year, so you don’t end up making unsuccessful decisions at the last minute.

Apart from this, you can avail the various tax deductions available and save your taxes. This will help you better plan your financial goals.

7. Stay informed and up to date:

Success cannot be achieved overnight, and the same goes for financial freedom. Keeping up with trends and terms can help you expand your knowledge and possibilities.

Despite the resources that equip us women to close the gap between women and finance, we observe that 93% of women do not access any website related to financial investments.

Therefore, constantly updating your knowledge will help you feel more secure and adapt to the financial world and the one in which you invest your money.

Conclusion:

Take small steps, make a financial plan with all your money goals and when you want to reach them.

Read, learn and ask other women about their financial planning journeys. Start small but start with a SIP (systematic investment plan)! Remember, financial independence is an essential life skill that every woman must be well-equipped with to be truly independent.

(The writer is the founder of LXME, the first financial platform for women in India)


(Disclaimer: The recommendations, suggestions, points of view and opinions given by the experts are their own. These do not represent the views of the Economic Times)

Add Comment