A Women’s Guide to financial Freedom

Finance is not a Rocket science says Payal Sharma, Entrepreneur and the owner of Firewood Restaurant Jaipur, Who herself manages her family’s finances. From paying bills to budgeting to deciding where to invest for , how much aggressive or moderate risk to be taken while investing for herself and her family.

Although the tribe of such women are increasing, still there is a lot of work to be done at this front. When it comes to money talk, we all conveniently think that our male counterpart understands it better and thus we leave all the decisions involving investments, financial planning, risk management onto him. I am a financial consultant and on daily basis I interact with people.. And 80% of my clients are male.

The irony of the situation is

Majority of them also don’t know a thing about financial planning. They are just doing it.. Because it has to be done by somebody anyways. Its high time Women understand the importance of it and start learning about personal finance.

While women must understand the importance, its also the man in the family, who should encourage and give impetus. Majority of our clients still do not involve their women in financial decisions, in spite of us encouraging them.

Money management is not a matter of interest but a life skill that everyone have to learn and there is no other way out.

We are living in the times where life expectancy has increased, cases of marital discords are on the rise, delayed marriages are common, likelihood of staying single, separated are increasing in our society, there are high chances that at some point of your life of you will have to handle your finances independently.

And for that we all need to learn as much as possible about Personal Finance, Financial Planning and money management.

Lets have a look and understand our Four point Financial Plan

Step1 - Family’s Security and Protection

Check on your family’s life insurance and medical insurance policies? Are they intact? Is the life cover sufficient in case of a mishap? Are the financial liabilities taken care of in your life insurance? Are the nearest and the city’s prominent hospitals are covered in it? How much Medical coverage each member has? Is it sufficient?

Step 2 – Loans

Check on all your loans. Are they good loans or Bad loans?

Good loans could be a home loan, car loan- Do not hurry up in the payment of these loans. They are made available at good interest rate.

Instead keep an eye on your high interest loans like- Personal loans, Credit card payments etc. They are bad loans and eating away your wealth. Repay them asap.

Step 3 – Emergency Fund.

This is again very crucial. And every family should have an emergency plan. But how to go about it? Calculate your monthly expenditure, say for example its Rs-30000 per month which includes your child’s monthly fees, ration, bills, EMI’s etc. So now you have to keep that much amount for at least 1 year and treat it as emergency fund. This should be liquid and can be withdrawn anytime.

Step 4- Investment Plan

Your investment plan should always be Goal Oriented. Goals can be anything like- Your Travel Plans, Purchasing a house, Education for children, Marriage etc. Decide upon a goal, Give a Financial figure to it, account for inflation, and then go ahead with your investment.

Make Retirement Planning a Priority

And Its mandatory for all to do Retirement Planning. This final step of planning becomes very crucial. More so because women have longer life expectancy and hence, need much bigger corpus to survive retirement.

Again Simple math – Calculate your current monthly expenditure and suppose there is 15 years to your retirement , calculate how much how much you will be investing so that after 15 years you get the pension to provide you for the same lifestyle as you are leading now. Inflation here will also be accounted.. there are calculators which will help you to get this calculation done. Just do that and you are sorted for the whole life.

My Mantra for the investment planning is - Keep it simple. Its easier for you to understand and after you, your family also can take care of it, manage it and get benefit out of it. So a good financial planning is one that is simple.

Did you find the word Finance just a teeny bit simple? Do let us know in the comments below.

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Happy Investing!