Whether you like it or not – financial planning is something that you cannot avoid. If you are looking for the right advice to get a head-start into the world of finance, here is everything you will need to begin.
Women and money management may not always have the best of relationships. Although a solid career and a steady source of income are the top priorities among female employees today, the same doesn’t always hold true for financial planning.
A surprisingly high number of women don’t start planning for retirement until they turn 40.
The topsy-turvy world of investments receives lukewarm greetings. Even simpler options like Mutual Funds and PPF don’t get adequate attention.
To all the millennial women on the road to self-discovery, here’s the deal.
Finance is that unbreakable cord that binds life to reality. And the sooner you embrace it, the faster you learn the ropes. Let’s get you the essential wisdom that will make the journey easier.
Emergency Corpus
Make your first investment towards an emergency fund that can cover you in the event of a financial crisis. Most financial advisors agree that at least 3 to 6 months of monthly expenses should be kept aside for this special fund. Apart from financial stability, it will keep your stress levels down, give you the confidence to move ahead and prevent you from running into debt-traps.
Life Insurance
Getting a Life Insurance plan is affordable and cheap when you are young. Although it doesn’t always provide excellent returns on investment, a Life Insurance plan is the best financial protection that you can get for your dependents. It’s one way of ensuring that your family has the financial means to carry on even when you are not around.
While selecting a Life Insurance plan, you generally have to choose the amount of cover you need and the duration you need it for. You have the option to pay your premiums monthly, quarterly or annually. Make sure to read all the terms and conditions before you sign up for one.
Additional Reading: Everything You Need To Know About Life Insurance
Health Insurance
A financial plan is incomplete if it doesn’t take into consideration the all-important Health Insurance. A typical Health Insurance plan covers benefits like emergency services, medical bills, hospitalisation charges and even out-patient expenses. Since health risks tend to multiply as you get older, it’s in your best interest to get an insurance cover when you are young and healthy.
Additionally, insurers charge premiums based on your age and health conditions. If you are young and in the prime of your health, you will get to avail the best Health Insurance plans at dirt cheap prices.
Additional Reading: Things Which Make A Health Insurance Plan Great
Retirement Planning
Ideally, you should begin to plan for your retirement from the day you start earning. Retirement planning will help you build a roadmap of your financial life and make it easy for you to achieve your goals during your working years and after.Retirement planning is all about investing for the future. As a first step, start-off with a Mutual Fund, keeping a long-term horizon in mind. Try and stay invested for 5 years or more to beat the market fluctuations and get maximum returns on your investment. Mutual Funds do carry a certain amount of risk with them but that shouldn’t deter you from exploring this hugely popular investment option. If you can be a little cautious with your investments and can afford to check your portfolio from time to time, there is none stopping you from reaping its benefits.
Additional Reading: 9 Golden Rules Of Retirement Planning
SIP
Chances are you have heard a lot about SIP but cared little to make sense of what it essentially means. Systematic Investment Plan or SIP is nothing but a method of investing a fixed amount every month in a Mutual Fund scheme. SIP is beneficial in mainly three ways:
- It enforces a financial discipline– Knowing that a fixed amount will get deducted from your account every month will make you reconsider your spending habits and help you cut down on the excess.
- It’s easy on the pocket– The best part about SIP is that you don’t need to pay in bulk. You can start off with a SIP that’s as little as Rs. 500. At BankBazaar, you need only Rs. 100.
- It helps you create wealth– With a SIP, you can watch your money grow over time. You’ll see how a tiny sum invested today turns into an enviable number in a matter of years.
Additional Reading: 5 SIP Schemes That You Can Invest In With Only Rs. 500
- Online Tools
We often trick ourselves into believing that investing is complicated without exploring the tools available for free. A quick search on Google will lay down the upside as well as the downside of every financial decision that you may possibly make in your lifetime. From EMI Calculators to FD rates to even investing guidelines, the opportunities are endless.
Saving up for the future is the cornerstone of a strong financial plan. Make a conscious effort to learn the basics before you sink your teeth in.