3 Tips For Young Women To Manage Their Finances Smartly

By | June 17, 2019

Women are breaking stereotypes on all fronts. Here are three important money lessons for young women to manage their finances independently.

3 Tips For Young Women To Manage Their Finances Smartly


Life may be a great teacher but we don’t always have to make a mistake to learn an important life lesson. We can always be smart and learn from the mistakes of others. As millennial women, we are more aware than ever of our rights and the importance of financial independence. Thanks to the centuries-long effort of our female ancestors, we now have the freedom to make our own choices and not get imprisoned for it. We might be heading banks today, but at the grassroots level, is the average woman really making strides in terms of her financial decision-making?

Let’s Hear It From Research

In a survey carried out by the wealth management division of UBS, a global investment bank, 3,700 high-net-worth women including married, widowed, and divorcees were polled across nine countries. The survey found that while millennial women take the lead when it comes to the daily management of finances, however, when it comes to managing money long-term, wealthy women are deferring to their male partners.

In the survey, while 85% of the women said that they managed day-to-day expenses, only 23% claimed to be taking the lead when it comes to long-term planning whereas 19% said that they managed these long-term responsibilities equally. The other 58% said that they deferred long-term planning to their spouses. These women cited reasons that ranged from a belief that their partner knows better than them when it comes to long-term planning, to not taking an interest because their spouse discouraged them to do so.

One of the most surprising findings of the survey was that younger women were more likely than their older counterparts to defer decisions to their spouse. In the 20-34 age group and the 35-50 group, 59% of women said that they deferred to their partners. In contrast, among women over 50, only 55% said they let their husbands take the lead.

What Could Trigger This Behaviour?

According to researchers, this kind of behaviour being exhibited by millennials has primarily to do with how millennial women are being brought up. Paradoxically, this behaviour stems from a sense of equality being greater than ever before. Nowadays, women don’t view themselves as necessarily facing issues with the gender pay gap. Neither do they grasp the impact that maternity leave or flexible working are going to have on their finances.

Learning financial lessons early on in life is especially important for young women, who, though, earn their own living but leave the long-term management of their money to others, often men. This habit has proved to be costly in many cases. Women are breaking stereotypes on all fronts and self-management of finances should be no exception.

Financial date night?

According to UBS, one way for women to step up and own the game when it comes to long-term financial planning is to arrange a “financial date night” with their better half to discuss their financial goals. If a conversation about your finances is something that you’ve been putting off for some time, lay everything on the table when you’re speaking with your partner-have a no-holds-barred conversation about what assets you have, what long-term investment or savings plan you already have in place and what each one of you wants for your later life and retirement.

Additional Reading: Why You Should Have A Joint Account With Your Partner And An Independent Account

In this article, we’ll look at 3 important money lessons that will help young women manage their finances independently and smartly.

  • No Compromise Fund

A suggestion freely given to women is to ‘find happiness in compromise’. You too might have been told this on many occasions and even done so. But if you really want to be the one calling the shots then never compromise with your finances. A healthy bank balance will see you through when nobody else will and give you much needed support to take tough decisions for your good.

A ‘no compromise’ fund should be planned keeping this in mind. It will allow you to say ‘no’ in the face of compromising adversities and allow you to take full charge of your life. A ‘no compromise fund’ will help you take necessary leaps—like switching jobs, moving cities, or getting out of a troubled relationship—with less worry.

When do you know your fund is strong enough to support your decisions? If your fund has enough money to see you through financially for at least six months then you know you are good to go. You can start building this fund with at least 20% of your monthly salary.

Our investment suggestion for a ‘no compromise’ fund is a Personal Loan. It’s an unsecured loan that you can use to fulfil any financial need should you come in need for it and not have to pledge a collateral against it.

Additional Reading: Why Should Women Have An Emergency Fund

  • Family Fund

Women are seen as the primary caregivers within a family and it is indeed one of their strengths. But sometimes love and care is not enough. You need money to tide over tough times.

A ‘family fund’ will give you the firepower to financially support your family in troubled times. You don’t have to be the breadwinner or the one responsible for all the work to get this fund going. Even if you contribute little towards family expenses on a regular basis, maintaining this fund should not be overlooked.

Many women who have a family fund have surprised their unsuspecting family by pitching in financially during rough times. Their gesture was definitely appreciated.

A family fund can especially come to the rescue in case of a medical emergency. When medical bills run high, every contribution counts.

You can use 10-15% of your monthly salary to start building this fund. Also opening a Recurring Deposit or a Fixed Deposit account can help you earn interest on all that you save.

Additional Reading: Women, Take Charge Of Your Finances!

  • One For Your Goals

We get so caught up in the daily grind that we often forget about our dreams and ambitions. Sometimes we even curb our need to indulge to the point of discomfort. Dreams and indulgences must be given their due and hence all ladies should have a fund for it too.

A goals fund will allow you to keep your ambitions in sight and also help save up for those rare indulgences. Be it a holiday, purchasing a luxury item or starting your own business, a goal fund will help you accumulate money. Moreover, planning ahead for discretionary spending reduces the burden at the time of purchase.

Save at least 5% of your salary for your dream fund. You can even funnel bonus or cash windfalls in this fund to give it a boost. Since your dream fund is for things in the future, you can look to invest your money in equity-linked Mutual Funds. Mutual Funds are known to offer inflation-beating returns and also help the investor inculcate a habit of saving regularly. You can invest in Mutual Funds via a systematic investment plan (SIP).

Additional Reading: Why Women Shouldn’t Shy Away From Negotiating Their Salary

You can employ many more tips to improve your finances, but having these three funds going will help you balance out your budget. If you are open to more investments or want a Credit Card or a loan to ease your finances, we can help you out.

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