In today’s fast advancing world, proper financial planning is important for a secured future. Financial planning is important, both for both men and women. Traditionally women are more engaged in managing the family’s budget, children’s education and marriage etc. But in today’s world, women are better educated and have a good career. They have a steady flow of income and its time they start taking keen interest in the financial planning for the family. In this article we talk about Financial Planning For Women.
Why Financial Planning For Women is Important.
- Good Career growth and increased income earnings.
Many homes today are double income homes, wherein both the parents work and so there is a considerable amount of additional income in the family, which can be invested wisely for good returns.
- Time off for raising children.
Many families are nuclear families and so quiet a few women make the hard choice of taking time off from work to raise their children. This choice becomes very difficult if the woman is the sole earning member or has a good source of regular income. They are constrained due to financial commitments. It would be helpful if proper financial planning is done inorder to save funds early in the “time off corpus”, which would make it easier for them.
- Women may have the responsibility of taking care of her parents and siblings.
Many women play the role of the “son” in the family. They are responsible for providing for the needs of their siblings and parents. It would be good to have a proper financial plan inorder to take care of these needs, even after marriage.
- Retirement Corpus
Women have a larger life expectancy then men. Hence it is advisable to take into consideration this aspect and work out a special retirement corpus well in advance to have a good retired life .
Some steps that women can take towards making a financial plan –
- Budgeting and saving
Budgeting is one of the key things for a good financial plan. Living within your budget is one of the best ways of tracking your expenses and making sure that you live within your means. Financial success comes when you are able to save considerable amount from what you earn.
The first step of budgeting is savings. Plan your monthly saving goals. Set aside a target of savings of atleast 5% to 15% of the family income and then plan your expenses around the balance. Though it may seem difficult, it will work if you are disciplined in your approach.
Once you have started saving, then it must be wisely invested in different products to yield good returns.
- Emergency contingency fund
You can also have an emergency contingency fund account. This can be a Saving Bank Flexi Account or a Money Market Account (liquid funds) that is easily accessible and can hold around 3 to 6 months of your family expenses in it.
- Retirement Fund
You can invest in EPF, PPF and NPS accounts for good returns and tax exemptions.
- Investment in different asset classes
Depending upon your risk appetite, you can invest in equity, debt, mutual funds, gold or real estate.
To find out more about this please read our earlier articles on investments in different asset classes.
Though most people do not want to take insurance, it is an integral part of a good financial plan. Life insurance, health insurance, auto insurance etc., provide for financial stability in case of unfortunate incidents that can happen at any time. Insurance will provide a source of continued financial stability, incase of loss of the earning member of the family or sudden medical expenses or accidents.
Investments and insurance are two different things and should not be mixed up.
Nomination is one of the most important things in every financial investment. Ensure that all your bank accounts, insurance policies, mutual funds and other financial investments have proper nominees.
Making a will is very simple and removes the possibility of a dispute in the near future.
Steps to make a will:
- Declaration in the beginning.
You need to declare that you are of sound mind and free of any kind of pressure. The person doing the will (testator) needs to mention his name, address, age, etc., at the time of doing the will. He or she needs to appoint an executor to execute the will after death else the court will appoint one.
- Details of property and documents.
The next step is to provide a list of items owned and their current values. These items can include house, commercial property, fixed deposits, shares and other investments. It should also clearly mention where these documents are stored.
- Details of ownership.
At the end of the will, the testator should clearly state who will inherit the said assets and in what proportion. If the assets are meant for a minor then the name of the guardian should be clearly mentioned.
- Witnessing of a will.
The “will” should be witnessed by two independent witnesses, which is mandatory as per law.
The other important things to be kept in mind are :
- Prioritize your goals and targets.
- Know your family long term and short term needs.
- Plan your family savings and expenditures
- Know the retirement plan of your spouse etc.
These are some of the important aspects to be kept in mind while determining the financial plan for your family.