There was a new fashion trend that hit the world somewhere in late 2015: t-shirts with the catch phrase “the future is female”. The words resonated and made an impact on millennial women. The trend continues and from their career to the personal front, women are taking over the world and how! Today’s 20- and 30-somethings are in a different world compared to women of yesterday in all aspects. In fact, many of them can claim to be more financially independent too. And yet, the term and concept of “financial independence” continues to remain elusive for the majority of women. A recent study indicates that it is rare for women to seek professional help to manage their finances. This is also true of women who consider themselves as financially independent. Only 17% consulted a financial planner and 34% came out with the fact that they needed expert support/guidance in this area.

Simply put, the term ‘financial independence’, means deciding what to do with one’s money. For a working woman, it could be the ability to take better financial decisions or being self-sustaining and for a homemaker, it could be about monetary freedom and contribution. It is important to understand that financial independence is not a sudden outcome but rather a lifelong journey of some decisions and behaviors. There is also a need to understand the different investment options other than FDs and gold, which was the traditional way until recently. Understanding the basics and developing the skills needed to save up can help women on this road to financial freedom. Here are some ways in which they can make a head start.

Understand and tap into investments

Investments are not just a reliable source of income. They help in fighting inflation and also ensure that there is a way for your savings to grow. Although women have been aware of the concept of since a long time, they must understand the full potential of the dividends that savings can bring as also the fact they are equally capable of successful investments. Making investments also enables them to accumulate wealth for the shorter and longer term.

Budget and evaluate spending habits

Creating a budget ensures that the spending is contained and that there is a possibility of saving for financial goals. Women are often better money managers but it is also good to evaluate where all the money is going. From basic budgeting to detailed future plans, savings can help women stay on track. A good starting point would be to budget the money earned every month, categorizing the spending, and separate the necessary from the frivolous.

Set aside funds and build credit

An important aspect of outlining the monthly budget is setting aside an amount as emergency fund. This fund should be such that it is enough to cover 3 to 6 months of expenses. From helping during tough times to taking care of a health emergency, the fund can prove to be a lifesaver. Another way to make financial headway is to build credit which starts by paying off debts. For instance, clearing the credit card balance every month is a good way to enhance credit score.

Make retirement plans

The World Health Organization indicates that women life 6 to 8 years longer than men, on an average. If that is the case, then retirement can be made a more pleasant experience by saving up when they can. This retirement saving can be gradually accumulated as RDs, FDs, or even debt funds. One can also look at equity mutual funds or investing small and regular amount through a monthly SIP or systematic investment plan.

The key takeaways for women

  • Do not close an individual account – even after marriage.
  •  While managing finances may seem like a daunting task at first, try to understand the different financial instruments slowly but steadily.
  •  SIPs and long-term funds are good for every woman. Those who start early tend to gain maximum returns.
  •  Women investors should have a provision for liquid funds as it can help in maintaining regular cash flows.

In conclusion

The traditional investment avenues for women have either been the good-old gold jewellery or FDs and other deposits. However, millennials have emerged as more prudent in their approach with a positive shift in investment preferences, goals, behaviours and mindsets. This is where today, there are various platforms simplifying and democratizing access to new age investments. They can not only educate women on the importance of financial independence but also familiarize them with the right alternative investment options to achieve it.

Apart from these efforts on the individual front, it is also important for the system at large to take steps that can bring women at par even in investment planning. A way to do this would be to introduce investment planning and insurance as part of early curriculum and encouraging them to handle finances. Woman can thus have a deeper sense of security and save and invest for a better future.



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Disclaimer

Views expressed above are the author’s own.



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