International Women's Day Article - Dear Woman, Follow These 8 Strategic Mantras For Financial Empowerment
It is beyond doubt that women have been better financial planners and money managers. Saving every month is an innate ability that a woman can easily do irrespective of however small or large the monthly are. Their virtue of saving in advanced has made them well geared to tackle future contingencies. An example of this saving habit was reported during the demonetisation days with a healthy amount of contingency funds getting revealed. Surprisingly, other members of the family were unaware that such savings were even made.
Women are expert money managers and we have many examples from our daily lives that explains how women have left a stamp of leadership. Be it the Union External Affairs Minister, Union Defense Minister, women at the helm of strategic affairs at various MNCs or even startup founders and entrepreneurs; women, indeed are leaving a print of their astute leadership and displaying exceptional ideas and innovative excellence. Along with this change, a major shift in the way financial matters are being discussed with the women of the house has been witnessed.
The patriarchal system usually involved restricting money matters to men of the house. All the discussions and the important financial decisions were traditionally entrusted to them. However, a shift is witnessed in this scenario, and financial matters are being discussed with the women of the house. This has been made possible on the back of the women empowerment in the country, where the women are not only managing the household chores but are also amongst the top brass of the country. However the women of the house do tend to display some traditional traits. But, following these 8 simple mantras will enable women to be far more superior than contemporary times.
Setting Financial Goals for the Family: It is always better if women are involved in setting the financial goals and priorities for the family. Women are always in better control of the family finances and are much closely aware of ground realities. Their spending more time with the children helps them know their child's aptitude better and even children tend to be emotionally closer to their mothers than fathers. Similarly, staying much more aware of the routine expenses can help them set retirement budgets on a realistic basis. Concerned about the desires, aspirations, and dreams for their family, it is always good to move in the right direction, instead of not even staying aware of where one is traveling.
Maintain an Emergency Corpus for the Family: While the tendency to save for contingencies and emergency requirements comes naturally to women, this can still be one of the most important processes of the entire financial plan. Further, apart from the regular monthly savings, the housewives can equip themselves with a supplementary credit card to stay prepared for any contingencies. With the regular and responsible use of credit card, the credit history also gets built up favorably, thereby allowing access to higher credit in the times of need.
Understanding that Gold is not the Only Investment Option: The love for Gold comes naturally to the women and the families do tend to be inclined to purchase gold jewelry as an alternative to investing in Gold. While it certainly has an emotional and social value for them, they must also understand that buying gold jewelry is not the only investment option available. Equity and fixed income investments must also be considered for better returns over the long term, as each asset class tends to have their own economic cycles.
Maintaining a Balanced-Risk Profile: Women tend to be conservative in their investment plans and most of the savings are invested in the ‘safer’ investments like fixed deposits etc. However, with the prevailing high inflation, such investments typically tend to erode value, instead of adding to the purchasing power of such money. While staying conservative is good at times, one must also analyze other investment options, especially over the long term. S&P BSE Sensex has generated around 16% CAGR returns over the last 40 years since inception and ignoring equity altogether can be a highly hazardous investing decision. Portfolio planning must have a suitable balance between the risk profile and returns expected.
Channelizing the Monthly Savings into Investing: It is generally seen that while the women keep on savings amounts from their monthly budgets, not much often do they invest such funds. Keeping amounts in cash is not a wise option, as the worth of currency erodes over time, and as such, such amounts must be channelized into investment products, so that the savings continue to grow over time. As such, they may be encouraged to register Systematic Investment Plans (SIPs) to help them accumulate a healthy corpus over the long term. You may be surprised to know that even small savings of Rs. 5,000 per month over a period of 26 years can help you accumulate a Crore of rupees (considering a conservative expected return of 12% p.a.). This is indeed the power of spending ‘time in the market’, instead of ‘timing the market’.
Staying on Track of Good Credit Habits: When women get involved in the financial discussions, they stay involved in the process. Further, for prudent financial planning, it is not only important to take care of the investments, but also steadily plan towards debt elimination. Since women tend to stay more responsible in their activities, they plan for the monthly installments and credit card dues in a more responsible manner and thus ensure that the installments are not missed. This helps the family finances to stay in good shape and in the good books of the banks. This goes a long way in maintaining a good credit score for the family members, which can get them better interest rates and preferential services from the banks.
Staying Informed about the Financial Liabilities: It is quite often noticed that the women in the house are the co-borrowers in the housing loans, and even sometimes the primary borrowers. This may have been necessitated due to the ownership structure of the house property for which loans have been taken. However, there might be a situation when such liabilities are taken care off by their husbands and the lady may not be even aware of it. It is always desirable for the lady to be known about their financial liabilities, as an unfortunate event may bring the life to a complete halt and yet, the liabilities need to be paid off. Especially in such times of financial need, one cannot risk having the credit score affected adversely, as a bad score also impacts the access to fresh loans.
Staying Interested and Curious : If you are being involved in some discussions, always remember one thing that there is nothing like a dumb or a silly question. On the contrary, you might be staying dumb, if you don’t ask a question. As such, it is always good to stay interested and curious, so that you continue to learn and grow.
Therefore, this is the time women move towards getting themselves empowered financially, displaying the similar strengths they portray in their daily lives. Happy Women’s Day!
Original Source: sifyfinance