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Financial Planning Women

Financial planning for women

In today’s fast advancing world, proper financial planning is important for a secured future. Financial planning is important for both men and women. Traditionally women are more engaged in managing the family’s budget, children’s education and marriage etc. But in today’s world, women are more educated and have a good career. They have a steady flow of income and its time that they start taking keen interest in the financial planning of the family.

Some of the key reasons for women to be involved in financial planning are listed below:

Good Career growth and increased income earning

Most of the homes are double income homes, wherein both the partners work and so there is a considerable additional income in the family, which can be invested wisely for good returns.

Time off for raising children

Most of the families are nuclear families and so many women make the hard choice of taking time off from their work to raise their children. This choice becomes very difficult if the women is the sole earning member or has a good source of  regular income. They are constrained due to family financial commitments. It would be very helpful if proper planning is done to save funds early in the “time off corpus”, which would make it easier for them.

Women have also taken the responsibility of parents and siblings

Many women play the role of “son” in their families. They are responsible for providing for the needs of their siblings and parents. It would be very good to have a proper financial plan to take care of these needs even after their marriage.

Retirement Corpus

Women have a larger life expectancy then men. So it is advisable to also take into consideration this aspect and work out a special retirement corpus well in advance to have a good retired life .

Some steps that women can take towards making a financial plan

Budgeting and saving

Budgeting is one of the key things for a good financial plan. Living within your budget is one of the best ways of tracking your expenses and making sure that you live within your means. Financial success comes when you are able to save considerable amount from what you earn.

The first step of budgeting is savings. Have your monthly saving goals. Set aside a target of saving of atleast 5% to 15% of the family income and then plan your expenses around the balance. Though it is difficult, still it will work if you are disciplined in your approach.

Once you start saving, then it must be wisely invested in different products to yield good returns.

Emergency contingency fund

You can also have an emergency contingency fund account. This can be a saving bank flexi account or money market account (liquid funds) that is easily accessible and can hold around 3 to 6 months of family expenses in it.

Retirement Fund

You can invest in EPF, PPF and NPS accounts for good returns and tax exemptions.

Investment in different asset classes

Depending upon your risk appetite, you can invest in equity, debt, mutual funds, gold or real estate.

To find out more about this please read our earlier articles on investments in different asset classes.

Though most people do not want to take insurance, it is an integral part of a good financial plan. Life insurance, health insurance, auto insurance etc., provide for financial stability in case of tragic life experiences. They provide a source of continued financial stability, incase of loss of the earning member of the family or sudden medical expenses or accidents. Investments and insurance are two different things and should not be related.

Nominations are one of the most important things in every financial investment. Ensure that all your bank accounts, insurance policies, mutual funds and other financial investments have proper nominees.

Making a will is very simple and removes all the possibilities of disputes in the near future.

Steps to make a will:

Declaration in the beginning

You need to declare that you are of sound mind and free of any kind of pressure. The person doing the will (testator) needs to mention his name, address, age, etc., at the time of doing the will. He or she needs to appoint an executor to execute the will after the death else the court will appoint one.

Details of property and documents

The next step is to provide a list of items owned and their current values. These items can include house, commercial property, fixed deposits, shares and other investments. It should also clearly mention where these documents are stored.

Details of ownership

At the end of the will, the testator should clearly state who will inherit the said assets and in what proportion. If the assets are meant for a minor then the name of the guardian should be clearly mentioned.

Witnessing of a will

The “will” should be witnessed by two independent witnesses which is mandatory as per law.

The other important things to be kept in mind are :

  1. Prioritize your goals and targets.
  2. Know your family long term and short term needs.
  3. Plan your family savings and expenditures
  4. Know retirement plan of your spouse etc.

These are some of the important aspects  to be kept in mind while determining the financial plan for your family.

Please read our earlier article  Cooking on a budget. This will help you prepare great meals for the entire family without breaking the bank.
 
Below are some resources that we feel will help you take better financial decisions, feel free to check them out (affiliate links)

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