It’s irrelevant if a woman is married or not. It’s crucial she take charge of her finances. Financial planning is as important for women as it is for men. Women have to take multiple breaks from their career. They have to hunt for new jobs after marriage on relocating to a new place, get back to work after a maternity leave, face gender discrimination at work, accept a lesser salary than their male counterparts and choose to quit working when its necessary.
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Let us check some statistics vis-a-vis financial inclusion of women in India. The Global Findex Survey 2017 conducted by the World Bank, provides information on financial inclusion and behavior across countries. Findex 2017 estimates that compared to 2014 and 2011 where just 43% and 26% of women had a bank account, 77% of Indian women now have a bank account. These numbers show that women are more financially included than ever before.
Every woman has some savings of her own, be it from salary or from the monthly budget allocated to the household. But are savings and investments the same thing? That’s what women in rural areas believe. As far as women working in the formal economy are concerned, they do see the difference but don’t actually do much about it. Women should understand that just opening a bank account or investing in simpler financial instruments won’t reap great returns. The portfolio needs to evolve and must be constantly monitored.
Though saving and investing are interdependent, there is a sharp difference between them.
Women need to come out of their comfort zone and think on the lines of investment and not just savings. In 2016, the household savings in India amounted to 26%. Obviously, a lot of household savings are done by the women of the household. Women in India now have the option to save in fixed deposits or recurring deposits, besides the usual SB Account.
Gold and informal chit-funds are other investment options widely used by women of the middle-class. But, this is only enough to meet immediate and minor financial needs and emergencies.
Just like charity, financial inclusion begins at home. While women can start learning and investing in better ways, men have to take the onus of involving women of the family in financial decisions. Financial planning is as important for women as it is for men. While homemakers are unaware and reluctant to save in options other than the traditional methods of saving, metropolitan working women are just stuck with the thought of investing in mutual funds, but are unaware on how to go about it.
About 80% of Indian women are financially illiterate. Therefore, even with money at their disposal, they are unable to make the most out of it. In spite of being employed, only 23% of women take their own investment decisions, and the rest depend on their spouse or parents. Even financial services firms target men, enticing them to avail financial products.
Each step takes you closer to the destination. Therefore, start reading up on the various financial instruments and investment options. Don’t wait to be taught the art of investing. It is your money, so take charge. Attend personal finance workshops and download wealth management apps. This is the first step which will help build a good foundation for your financial life.
You cannot reach the summit of Everest on the very first day. You will not even reach half way without effort, patience and planning. So, start by investing in a few low-risk options like Public Provident Fund (PPF) and Recurring Deposits (RD). The minimum investment amount is as low as Rs 500 a year. PPF offers Section 80C tax benefits, up to a maximum of Rs 1,50,000 a year. You may also invest large amounts in tax-saving Fixed Deposits (FD).
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Women in India tend to have a higher life expectancy and also greater chances of developing lifestyle diseases. Then why avoid health insurance? A family floater health insurance plan is great, but it is not enough. When it comes to life insurance, typically only the husband buys a life cover. But, what is the harm if a working woman avails a life insurance plan? Irrespective of whether you are a man or a woman, a life or health insurance plan ensures the financial security of your family. It also offers tax benefits.
Explore investment options like SIPs (a method of investing in mutual funds), mutual funds, equities, and so on. These investments give you compounding benefits. Remember to educate yourself before actually investing in these options.
Starting is one thing, continuity is another. Therefore, make sure you continually monitor your portfolio. Managing investments requires patience and knowledge.
Keep updating yourself. Modify your portfolio if necessary. Realize investments which are not doing well. Invest in well-performing investments. As you realize greater returns, increase the amount of investment in emergency funds, retirement funds and children education funds. These are the steps to financial freedom; the sooner you take them the better.
Be Wise, Get Rich.
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