5 Tips For Financial Planning For Women11 March 2022
Women are known to be multi-taskers. Women are better at switching between tasks and juggling multiple tasks simultaneously, be it packing lunches, getting kids ready for school, handling appointments or social engagements.
Modern women are rockstars who are breaking all stereotypes about being the weaker gender; as a result, financial planning for women is no longer considered taboo.
But it is also a fact that women are not responsible for financial planning due to social conditioning and patriarchal customs.
Why Focus On Financial Planning For Women?
Since the dawn of time, women and financial planning have been intrinsically linked. Women have always been in charge of home finances. So, there are several compelling reasons for women to become involved in personal financial management.
Small, prudent measures can help you increase your money, attain your financial objectives, and retire like a queen while still allowing you to indulge in the odd shopping binge, overseas vacation, or anything else you like.
There is, of course, a more remarkable change in today’s work culture and more cooperation from family members that more women are working today than ever before. However, because of their caregiving obligations, women spend less time in the workforce, opting for part-time/low-paying jobs/service positions that are not covered by pension plans, receive fewer pension benefits and lower wages due to gender differences. Due to which they are unable to support themselves financially.
Importance Of Financial Planning For Women
It is a good time for women to be financially independent and take charge of their finances. With easy access to internet information, shifting societal norms, and the ability to earn and invest, women must overcome the stigma and face financial difficulties straight on.
One investment advice for women, whether single, married, homemaker, divorcee or separated, is to do the following:
- Allocate A Budget
- Set financial goals
- To assess and identify where you stand currently in terms of finances.
- To have an emergency fund in place.
- Focus on retirement planning and health insurance
In the next section, we’ll explain how to undertake financial planning for women at any stage of life.
Tips For Financial Planning For Women
Allocate A Budget
Create a customised budget based on your monthly/annual income and the timeframes you desire to reach your goals. Following the 50-30-20 rule is an excellent place to start. When you get your income each month, set aside 50% for living costs, 30% for savings and investments, and the remaining 20% for living like a queen.
It is essential to budget your cash flow. You can work around the estimate once you have a clear picture of your expenses. With a budget, you will also predict how much money you will require for the next 10-15 years keeping inflation in mind.
Set Financial Goals
As a part of financial planning for women, learn to create a plan and set financial goals for yourself. You may make a list of your financial objectives using a spreadsheet or Excel. A financial goal is something you want to accomplish with your hard-earned income. The objectives are divided into short, medium, and long-term categories.
Once you've devised a strategy, you'll be able to identify the objectives for which you should save or invest. As a result, it makes financial planning for women more targeted.
For example, you will have to restrict your variable expenses to a limit. Failure to manage irregular spending might lead you into a financial pit, from obligatory travel, phone, and internet services to an impulse shopping spree or a night out with the girls. Of course, you don't have to miss out on all the fun, but if you have long-term objectives in mind, such as purchasing a home or establishing a company, you should think about being more cautious with your money.
Identify Your Current Baseline
The next step in the financial planning process is to figure out where you currently stand. You may determine your net worth or baseline by subtracting your assets from your obligations. Bank accounts, investments, real estate, jewellery, and other assets are examples of assets. Credit card debts, loans, mortgages, and other liabilities are examples of liabilities.
Prepare For an Emergency Fund
There are no warning signs before a rainy day. Emergencies can strike anytime. As we have mentioned before, women are often obligated to take career breaks to take care of children or sick parents, which means no income and no investments. Therefore, it is crucial to have liquid money without a paycheck to sustain during such times.
Prepare a backup fund in a liquid investment choice with no lock-in time. You should have access to the funds at all times. As a result, set aside money every month to meet those unexpected expenses that your insurance won't cover.
Focus on Retirement
When it comes to financial planning, women are often unaware that they live longer than men. As a result, they will demand more money on average to live without a salary. As a result, planning for retirement is an integral part of developing a financial strategy.
Although retirement may appear to be a long way off, you will only have the money you have saved. As a result, even individuals who expect to work after retirement should prepare for a life with a limited income source.
Also, make sure you have health insurance coverage in place so you do not financially bleed dry in the event of any medical emergencies.
Financial planning for women is essential for various reasons. To begin with, women have a shorter working tenure than men, have a greater life expectancy than men, and there is a gender wage disparity. And in todays day and age, money represents power, independence and freedom. Therefore, proper financial planning is required to achieve goals.
Frequently Asked Questions
Why Should Women Do Financial Planning?
Women will have a sense of financial independence with efficient financial planning. Financial planning will provide them financial freedom, and they will no longer be financially reliant on their male counterparts.
How can a woman strengthen her financial position?
A woman can strengthen her financial position by strategically planning and saving more. Due to a shorter working span and career breaks, a woman has to speed up the savings rate to beat inflation to sustain and overcome the hurdle of being financially dependent.
Where do I start with financial planning?
It all starts with planning and budgeting. It is important to set your goals, track your money, invest early, tackle debt, if any, make sure you have an emergency fund etc.
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