How working women should take charge of their financial goals early in life

March 8, 2021 11:11 AM

As a financially independent woman, there’s so much more that you can do with your money than simply using it to pay your bills. Here’s how you can take charge of your financial goals early in life.

The negative returns from deposits have been accompanied by a drop in household savings. Representative Image

From running the household single-handedly to launching satellites into the Mars’ orbit, there’s nothing that womankind can’t do. However, as is the case with women across geographies and social strata, they often end up ignoring their health and finances in the bargain. Take the case of health insurance. Given that the average woman has a longer lifespan than men and tends to undergo more health-related complications in her lifetime, having a health insurance cover would seem like a no-brainer. However, according to an ICICI Lombard General Insurance survey, only 22% of women have individual health insurance.

When we shift our focus to the workplace – the picture is even bleaker. Despite women helming MNCs and founding unicorn start-ups today, the average woman still gets paid lesser than a man for the same set of responsibilities. This used to be considered a case plaguing only first-world countries at one time but has also surfaced now in India.

When it comes to managing their personal finances, most women are still relying on a financial approach that is best described as medieval. With expense streams diversifying and cash inflow limited, women need to come up with novel ways to manage their money better. And the earlier they start, the better. Ideally, women should think single when it comes to money. Women outlive men on an average of at least five years. Having a solid corpus in place will help them become effective stewards of their financial destinies.

As women grow into evolving roles, both in the workforce and at home, taking the right measures where saving and investing are concerned is essential.

Women have different life expectancies

Life expectancies maybe on the rise for everyone, but statistically, women are more likely to outlive their male counterparts. Longevity is one of the most important possibilities that women need to factor in while drawing up their financial roadmap. Women generally have a tendency to gravitate towards more traditional forms of investment like PPF, KVP, NSC and FDs. However, they should accord equal importance to equity-linked investments like mutual funds. These will not only help save taxes but also trump other investment options in terms of returns, lock-in period (shortest lock-in period of three years) and tax-treatment of gains. However, investing in mutual funds calls for an assessment of financial goals first. A financial planner can help create the right portfolio of investments based on those goals.

Women will have more mid-career breaks

Caring for a child, ageing parent or ill spouse is likely a situation that women will have to grapple with at some point in their lives. Carrying out these duties alongside a full-time job is a real challenge. Most have to give up their jobs to be able to take on these roles. These situations have potential financial implications that are often ignored while building a financial corpus. Plan for a retirement corpus that is not depleted of its financial resources owing to long-term caregiving for an ill spouse or ageing parent.

Women are wired differently

Women and men are poles apart when it comes to their risk appetite for investments. Most women often make the mistake of being too conservative in their portfolios and choice of investments. Expert guidance from a financial adviser can help women increase their investment appetite and build their financial confidence.

The pay gap exists, still

The gender gap has far-reaching consequences that extend beyond women’s career advancement. It even determines their financial stability in terms of their eligibility for credit cards and personal loans as well as their ability to save for the future through mutual funds or fixed deposits. Your retirement income will be based upon the accumulation of your lifetime savings. This means that the pay gap will result in a substantial retirement wage gap. Many women, including those who are homemakers, hold off saving for their retirement until they reach their 40s. Women should start early with investing for their retirement corpus. That way, despite career breaks or the pay gap, their investments will get more time to grow and benefit from the power of compounding.

Get an individual comprehensive Health Insurance plan

Here’s a revelation that will raise eyebrows: a lot of women rule out the need for health insurance because they imagine they would never fall sick or face any health-related complications. As short-sighted as it may seem, women fail to realise that diseases don’t discriminate and no matter how healthy or fit you may be today, no one can predict the future. Juggling between demanding work and personal lives can bring with it its own set of lifestyle disorders like cardiac diseases, obesity, diabetes, etc. Given that in most cases, women steer the ship when it comes to their household, a sudden bout of illness or disease may bring the household to a standstill and jeopardise the family’s finances.

Most organisations today, as a part of their compensation package, offer employees a health insurance plan that covers employees as well their dependents. Sadly, a large segment of women assume this cover to be enough and do not feel the need to have an individual health insurance plan. What most fail to realise is that in today’s volatile job market where job loss is frequent, it is imprudent to rely on the employee health insurance cover alone. If you face an unanticipated medical emergency while you’re between jobs, this company-offered health cover will prove to be useless. Since women tend to also have a longer lifespan, it becomes imperative for them to have an individual health cover.

A sound financial plan is all the fillip a woman needs to go forth and conquer new milestones without looking back. Onwards and upwards!

(By Rati Shetty, Co-Founder and CPO, BankBazaar.com)

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