A Woman’s Guide To Financial Independence

By Medha Roy Chowdhury | March 5, 2019

We’re here with simple and applicable personal finance tips for the modern woman.

Women are at par with men in all respects of life. From building extremely rewarding and enriching careers to becoming multi-tasking goddesses of a parent, women are excelling at it all. Then why should their finances be left behind?

Let’s face it, the topic of finances can be quite intimidating, but the key to an empowered life lies in effective financial habits. This applies to one and all. It’s important that women learn to budget, have an emergency fund, save for retirement, and invest in channels with lucrative returns.

Before you begin, get started by having a clear idea of what you want. Whether it’s a house full of dogs or cats, or a job that lets you travel, or a car of your own, knowing what you want will help you take the wheel on the road to financial freedom.

Additional Reading: Women’s Day Special: Let’s Talk Finance, Shall We? 

We’ve listed a couple of tips to help women take stock of their financial well-being and guide them on their journey to financial fitness.

Budgeting

We can’t stress this enough. Setting up a budget is much like drawing a blueprint of your finances. Determine what’s coming in and what’s going out.

For starters, group your expenditures into three categories. The absolute essentials such as rent; the discretionary expenses such as the customary tour to the exotic restaurant; and the variable expenses such as utilities and water bills that are important but can be reduced by changing certain habits.

To define a budget for your monthly expenses, try giving the 50-20-30 rule a try. Confused? Read on to know more.

Save about 50% of your income for absolute essentials, 20% for financial goals such as retirement planning, and 30% for non-essential expenses.

Additional Reading: How To Be An Expert At Tracking Your Finances

Saving

Today’s woman has become savvy about savings. With more women embracing their goals and dreams unabashedly, many banks now offer Savings Accounts that are specifically designed keeping in mind the needs of women to help them with their financial journey. These offer women with additional perks such as higher reward points and low transaction fees, etc.

To get the basics of savings right, here’s what you can do. Compartmentalise the unused amount left with you at the end of each month into three categories. The first is for long-term needs, the second savings fund is directed at short-term goals, and the third should be used as a cover for rainy days.

Long-term needs can include building a retirement nest, saving up for your children’s education or marriage. Short-term goals can involve paying off existing loans and emerging debt-free.

Besides your immediate needs, you should set aside a sum for unexpected emergencies. Unfortunate circumstances such as a layoff at work, a medical emergency, a critical financial crisis can take place anytime and anywhere. Experts advise having at least three to six months’ worth of expenses to serve as a decent cushion and financial backup during difficult times.

Additional Reading: 8 Simple Ways For Women To Ensure A Worry-free Retirement

Investing

Wondering why we insist on investing a portion of your hard-earned paycheck? Imagine this, if money just sits idle in your bank account, it doesn’t grow. This is precisely where Investment steps in. Cash that is left to rest actually depreciates in value with each passing year because of inflation.

At some point in your life, you must have heard someone rant about the ill-effects of inflation. What they simply meant was that inflation is not great news for savers. Why you ask? We’ll tell you why.

Inflation reduces the purchasing power of your money. Let’s say you have a contingency fund that amounts to Rs. 10 lakhs. In ten years, the value of the sum will reduce due to rising prices. What feels like a huge sum now won’t be quite as much given the inflating prices.

Enter Investments! This is one of the most time-tested ways to grow your wealth or savings. Before you begin, start out by determining how much you’re willing to invest. This should ideally be decided after considering your defined monthly expenses such as rent/mortgage, Credit Card payments, Loan EMIs, food, clothing, and utilities.

Additional Reading: Are There Credit Cards Specifically Designed For Women?

As an investor, you’ll have plenty of options. Be it Mutual Funds, Savings Accounts, or Fixed Deposits. So, consider your risk-taking ability and then pick an investment vehicle that best suits your pocket.

For instance, in Fixed Deposits, returns are fixed and not subject to market risks, hence, they are guaranteed. On the other hand, in Mutual Funds, returns are high but subject to market volatility, meaning these are riskier options than Fixed Deposits. So, both investment avenues have their own advantages and disadvantages. Any kind of investment demands thorough research before you can step into it.

Additional Reading: Investment Options For Millennial Women

The notion that women are incorrigible shopaholics and bad investors is an outdated one. Women these days are fierce risk-takers with a thirst for independence, scaling great heights by sheer virtue of their merit and resolve.

Additional Reading: How Women Can Restart Their Career After A Break

With women taking the forefront and commanding a presence in all fields, banks are more than willing to cater to the financial needs of their female customers. Currently, financial institutions are coming up with a host of products ranging from Credit Cards, Personal Loans, Home Loans, to Insurance plans that are designed specifically for women.

If you’re interested in kick-starting your financial journey with any of the financial products mentioned above, you’ve reached the right place!

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Category: Budget & Savings Managing funds Money Management UCN
Medha Roy Chowdhury

About Medha Roy Chowdhury

Square peg in a round hole, Medha reads whenever she gets the chance to. She is happiest when travelling and dreads having to choose between the hills and the sea. Dog lover at heart, she is in pursuit of adopting a few canine friends someday. Weird as it may be, she bakes when stressed. Previously a Market Research Editor by profession, she takes a keen interest in finance. When she is not reading, you’re sure to find her with her ukulele.

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