Being a woman in today’s fast-paced life can be challenging -- juggling career, domestic life and a host of other responsibilities. When you are trying to manage multiple challenges, planning your finances might take a backseat. Here are some ways you can take charge of your money and fulfil those dreams!
ENSURE YOU INSURE
Life can be full of unpleasant surprises that could derail even the well thought out plans. Take cover and avoid an uncertain future by investing in insurance. There's no dearth of insurance plans, but opt for plans that fit your needs.
Already insured? Look up the terms and see if they match up to what you’re looking for. Insurers have a number of plans tailored to women that offer a range of benefits. Sifting through riders and exceptions is a piece of cake (said nobody ever), but a little effort now could go a long way towards saving you heartburn in future.
While most of us take good health for granted, a medical emergency could play a spoilsport. Health insurance to the rescue! With flexible and comprehensive women-centric plans, you can shop around for a plan that meets your medical needs. What’s more, health insurance premiums can save you up to Rs 25,000 a year in taxes (under Section 80D).
Parting with your hard-earned money may hurt when tax filing season comes along, but you can ease some of the pain through some prudent investments and insurance premiums. You can maximise your savings through investment and tax-saving options. Financial instruments like Equity Linked Savings Schemes (ELSS) and Public Provident Fund (PPF) can reduce your tax liability and also provide returns. Being long-term schemes, you end up saving a fair bit over a period of time and receive a tidy sum on maturity, making it a win-win. Being part of the Employee Provident Fund (EPF) contributes to your tax saving while building a nest egg for the future. That said, don’t rely just on your EPF fund and invest regularly in multiple instruments to meet all short and long-term financial goals.
INVEST, INVEST, INVEST
It’s a tough world out there, and the odds are stacked higher against you as a woman. With longer life expectancies, lower salaries and inflation, it’s a triple whammy. While counting every penny might be a bit extreme, small savings can go a long way in building up that retirement nest egg.
So, the first step should be to set clear and time-bound financial goals, like raising Rs 2 lakh in a year for that coveted international trip, Rs 20 lakh for a home down payment fund in 4 years and building a retirement corpus worth Rs 2 crore. Once you have set the targets, lay out detailed savings and investment plans to meet the goals in a timely manner. The goals, alongside your risk appetite, would also dictate your choice of investment instruments. For example, you may decide to invest Rs 10,000 a month in an equity mutual fund SIP, another Rs 50,000 a year in Public Provident Fund and stash another Rs 3,000 a month in a recurring deposit account to meet your goals. These, in addition to your pure tax-saving measures, should help you grow your wealth while keeping your tax liability under control.
However, ensure a couple of things before starting any investment. First, understand how the particular instrument works, what are the risks and pitfalls before signing on the dotted line. You may seek a professional investment advisor’s help if you get stuck at some point. And second, always aim to diversify your investment portfolio by investing in multiple instruments with varying degrees of risk to keep the overall risk factor under control.Also, don’t limit your investment just to save on taxes. Invest to meet your financial goals and grow your wealth.
SAVE FOR A RAINY DAY
Having some money socked away for a rainy day is proven financial advice that never goes out of style. Build up a contingency fund that’s liquid and easy to access so you aren’t left high and dry in the future. To avoid the temptation of dipping into this fund for an impulsive purchase, you could set up a separate account and add to it regularly.
An ideal emergency fund should cover all your expenses for at least 3 months and incrementally rise in tune with your income. Adjusting for inflation is also important and should be kept in mind when you plan your fund.
Getting access to credit is easy these days, but heavy borrowing could erode your savings. While credit should ideally act as a bridge to connect our dreams to reality, the debt needs to be managed well so that it doesn’t impact your financial health. Use your credit card wisely, timely pay the dues in total and boost your savings on regular expenses with benefits like cashback, instant discounts and redeemable reward points. Focus on creating assets that will reap dividends in future, such as property. Home loan interest rates are often lower for women applicants, with many banks and government agencies also subsidizing other charges like stamp duty. Unwilling to take the plunge alone? You can also consider being a co-applicant with your spouse, which increases your borrowing amount while retaining the low rates. While there’s no one-shot way to financial freedom, regularly checking your investment portfolio and making necessary adjustments can help you meet your financial goals in time. (The author is CEO, BankBazaar.com)