We live in an era where women earn well and are independent. But still, a lot of women hesitate to take investment decisions, either because of a lack of experience or knowledge.

Women generally do not actively participate in the investment decisions taken in a family. In how many of the households do women get involved in such decisions? Not many. Women handle their careers and family responsibilities exceedingly well. However, when it comes to making investment decisions, they tend to look up to their fathers, husbands for guidance and approval.

It’s time for women to get confident about investing.

In this blog, we explain why women should aspire to be financially independent.

You must understand that being educated and excelling at careers is just going halfway down the road. What is more important is you must be smart about spending money and make prudent investment decisions.

The aspirations and financial goals will be different for women at different stages of life. It does not matter if you are a young woman who has just started earning or you’re married or you are a homemaker, it is important for you to have your own dreams and goals.

Start from wherever you are! The earlier, the better!

Here’s a checklist for women that can help you get started with financial planning:

checklist to get started with financial planning - ithoughtplan - banner

    1. Review your Income and Expenses
    2. Write down your Financial Goals
    3. Cut down on unnecessary expenses
    4. Have Adequate Insurance
    5. Have an Emergency Reserve
    6. Build your Retirement Corpus
    7. Discuss your financial goals with your partners
    8. Start investing towards your goals

How Can a Financial Plan Secure Your Future

Adequate Emergency Reserve

We live in uncertain times. Having an emergency reserve comes in handy during a lot of unfortunate circumstances. Women tend to take career breaks, or they would like to take the plunge to start their own business Having your own contingency corpus will be like a safety net to fall back on.

Larger Retirement Corpus

A lot of surveys indicate that women live longer than men. Living longer requires having a larger retirement corpus and a dedicated medical reserve to fund your expenses.

To understand better, let’s look at how Shreya built her retirement corpus:

Shreya is a 30-year-old consultant working in a top Consultancy firm. She aspires to be financially independent. She needs a monthly income of Rs. 1,00,000 to sustain her current lifestyle. Assuming a life expectancy of 85, let’s have a look at different corpus requirements at different timelines:

Age Retirement Corpus Requirement
When Shreya is 45 years Rs. 7.75 Crores
When Shreya is 50 years Rs. 9.25 Crores
When Shreya is 60 years Rs. 12.50 Crores

This also takes into account the inflation rate.

The target retirement corpus requirement helped Shreya to start investing diligently towards building her retirement corpus.

Asset Allocation

When women are not aware of the best investment avenues, the surplus either lies idle in the bank account or gets invested in low-risk instruments like fixed deposits, recurring deposits which yield subpar returns and do not even beat inflation.

Women need to craft their own long term investment strategy and think beyond short term needs.

Traditionally, women have been investing in Gold. But It is important to have a diversified portfolio. Asset allocation decisions are to be taken in alignment with your long term and short-term financial goals.

Cutting Down on Unnecessary Expenses

Splurging money on materialistic things can give you instant gratification. But, when you invest your money diligently, the compounding will do wonders. When you buy an article for Rs.10,000, it instantly loses its value. Eventually, you will end up replacing the item which you had bought.

But, when the same amount is invested in a compounding instrument, the principal gets multiplied manifold. Every time you choose to spend less on something, you can consciously put that money towards things that matter to you.

Sometimes, having a frugal lifestyle can accelerate your journey to financial freedom. It is important to prioritise what matters to you the most.

When your income increases over the years, your focus should turn more towards securing your future.

Conclusion

Women must take charge of their personal financial wellbeing and excel in money management, just how they’re doing in other fields.

If you are a working woman who’s wondering how to take charge of your finances or knowing which investment avenues to take or whether your financial goals are on the right track, this can seem to be a complex task to do on your own. Taking financial advice from a professional you trust can help accelerate your journey towards financial independence.

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