How woman can manage her finances at different stages of life

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Updated: Mar 08, 2021 4:34 PM

The one area that is still seen as a male domain concerns finances in general and investments, in particular. To ensure financial independence, experts say women need to be more confident while investing.

working women, financial goals, women's day 2021, financially independent woman, PPF, mutual funds, KVP, NSC, FD, fixed deposit, health insurance, personal financesBeing single in the 20s is different from being single in the 40s.

Modern Indian women are breaking age-old barriers and taking up new challenges, both personally and professionally. However, industry experts say it is imperative for them to free themselves from financial overdependence on family and guard themselves against uncertain situations, where sound financial planning plays a key role.

While growing inflation and rising costs of living are key factors, Navin Chandani, MD and CEO, CRIF High Mark says, “it’s important to realise that financial commitments evolve as we progress in our lives, and our diverse needs such as higher education, leisure, wedding, child care, starting one’s own venture or even early retirement require sound planning.” To create a sound financial plan, experts suggest one should have clear and realistic financial goals, such as a child’s education or comfortable post-retirement life. It is critical to factor in inflation while drawing up your financial plan.

Vinit Kapahi, Head Of Marketing Aviva India says, “A smart investor would always ensure that the risk is distributed over a variety of instruments. A high-risk instrument such as equity should ideally be balanced with a stable one such as bonds. One’s investment portfolio should be a judicious mix of equity, debt, life insurance or real estate.” He further adds, “Along with the current assessment of future needs, risk of unexpected events must also be factored in. Regardless of gender, it is crucial to be financially prepared to deal with unfortunate events.”

Additionally, it is imperative to have adequate insurance to ensure that the family does not go through any financial stress in case of any unfortunate event that causes loss of life. In the case of life insurance, a simple term insurance plan can ensure financial continuity.

Another important element is to begin planning for financial needs at an early stage. The cost of postponement will weigh heavily in the later years when investing becomes a compulsion rather than a choice.

Sucheta Shah, Executive Director, Atlas Integrated Finance says, “The key rule to staying financially independent is to plan and manage money. From spending erroneously to saving and then investing can help one make the right financial decisions.” She further adds, “After starting to save, the savings then need to be invested in a combination of debt and equity depending on her age and risk-bearing profile.”

Money and woman at different stages of her life

Women in India have been taking huge strides in breaking the glass ceiling in many industries. It is a major shift, from managing households to managing businesses. However, the one area that is still seen as a male domain concerns finances in general and investments, in particular. To ensure financial independence, experts say women need to be more confident while investing.

Kapahi, says “Investing means different things to different women. A single parent should not invest in the same way a single woman might. And a woman in her 20’s can afford to take risks that a woman in her 40’s cannot. So, is there an age when women should start looking at investments? Actually, no! But the earlier one starts the better and this holds true for any individual.”

Young and Single Woman – Experts say being single in the 20s is different from being single in the 40s. In the 20s, there is a freedom to take a risk and it’s imperative to start planning to invest immediately and consistently. Kapahi, says “One can have a mix of short and long-term goals and invest in instruments that can help you achieve both. Later, the focus of investment strategy may shift towards retirement savings, increasing contributions to your pension plan, and adding top-ups to insurance plans.”

Married and Working – At this stage, a woman might have the unenviable task of simultaneously managing a household, looking after children, and pursuing a career. Experts say time is at a premium and making informed financial decisions and keeping track of investments might suffer. It is advised to purchase a suitable term insurance plan as it is extremely affordable yet provides comprehensive security to the insured and her family. Also, if one is already covered with a health insurance policy, one can consider increasing the coverage.

Homemaker – A homemaker might not have her own income and usually saves from the household budget. In such a scenario, experts say one can invest in hybrid bank accounts, RDs, and FD.

Single Parent – A single woman parent has an additional responsibility apart from their children’s education and marriage, planning for their own retirement. According to experts, it is essential to invest in term insurance or child insurance to take care of a child’s dream, education, or marriage. Also, it is important to build an emergency fund to cover at least six months’ worth of expenses.

Kapahi, says “Investment in less risky products should become the norm, as should a diversification of the financial portfolio. Above all, one must review your portfolio every month to chalk out risks that aren’t in accordance with the financial goals.” Investing is a life-long process and tracking your investments is just as important as making the right investments.

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