Five Mantras for women to take charge of their own finances

 

Five Mantras for women to take charge of their own finances

Lack of involvement

Despite rising literacy, professional exposure, and financial independence, many young people, including women, are reluctant to take full control of their finances.

This hesitation stems from social expectations, lack of exposure to financial matters growing up, and prioritizing family responsibilities over personal wealth building. Most women leave financial decisions to the male members of their family.

Learn about investing and equip yourself to handle your money.

Understand what is happening to your portfolio. Read, ask questions, and prepare as you would for a work meeting or an interview.

No budgeting, saving

Many young individuals fail to plan their budget. The are neither tracking their expenses, nor planning for long-term goals. Impulsive spending often leads to inadequate savings, leaving them vulnerable during emergencies, and at retirement.

Follow the 50-30-20 rule: Allocate 50 per cent for necessities, 30 per cent for discretionary spending, and 20 per cent for savings.

Lack of a contingency plan

It is critical to build a corpus for any unforeseen financial stress. Build an emergency fund covering 6-9 months of essential expenses.

It is crucial to allocate money into different buckets based on horizon: emergencies, intermediate goals (car purchase, house down payments), and long-term goals (children’s education, retirement).

Inadequate insurance

Working women have economic value and must buy term insurance if they have financial dependents or obligations. Experts recommend coverage of at least 10 times their annual income. Health insurance is equally vital. Without it, a medical emergency could wipe out savings. Buy comprehensive health insurance covering medical expenses, critical illnesses, and maternity. Also buy accident and disability cover.

Investing:  Avoid extremes

Investing in unfamiliar or excessively risky assets must be avoided. Investing in high risk options like direct stocks, futures and options, or crypto-currencies without proper knowledge can lead to losses. Instead, one should build a diversified portfolio with equity, debt, and gold, and maintain an asset allocation that matches one’s risk profile.

Focus on risk-adjusted returns. Women should not rely solely on safe but low-yield fixed-income products. Explore options such as mutual funds, index funds, or retirement plans rather than avoiding risk entirely.

GET SAVVY ABOUT DEBT

• Follow the 50-30-20 rule: Allocate 50 per cent for necessities, 30 per cent for discretionary spending, and 20 per cent for savings
• Distinguish between good loans (taken for asset building, business growth, or education) and bad loans (used for personal consumption)
• Focus on paying off high-interest debt first
• Maintain credit card usage at 30 per cent of the total credit limit to maintain a good credit score

 

For More Details: Pooja Manoj Gupta, visit www.giia26.com

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