Financial independence is an important milestone for both men and women, especially for today’s advanced women, it is very important to be financially strong if they want to live on par with men, because financial independence is no longer an option but a basic need for everyone, be it a housewife or anyone else. These 7 tips will surely help you to reach this stage.
Your health needs to be in good shape and your finances strong to take care of your loved ones.
However, despite this knowledge, we see that when it comes to investment or personal finance planning, most women depend on their husbands or fathers to meet their financial goals.
So first let’s understand,
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Why Should Women Be Financially Independent?
Well, why shouldn’t they be? Every adult should be financially independent because we can only depend on ourselves. It is more important for women, because:
- Women are paid less than men
We know that there is an income disparity between men and women, with women earning less than their male counterparts. Therefore, their earnings are also lower than those of men, which reduces savings for later years.
- Children and family responsibilities can interfere with a career
According to a Quartz report, around 70% of Indian women in the formal workforce who quit their jobs for family reasons are currently struggling to re-enter the workforce.
- Lack of financial literacy
According to the survey, women have less knowledge about financial products due to lack of financial knowledge. They are also less likely to pursue courses that lead to employment in the financial planning department.
- Life expectancy of women is higher than men
Life expectancy of women is generally 8% longer than that of men. Unfortunately, on occasion, after the death of the financially responsible person in the house, the financial responsibility can suddenly come on.
Read: Family financial plan- 7 steps of Financial planning for families
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What Is The Solution?
Following are 7 ways to become financially independent:
1. Get an education
Take the time to study financial planning and investing. On average, women lag behind in making post-retirement investment decisions. Oftentimes, self-doubt can be the reason behind this. But take some time for yourself, read books and articles, do research on the internet, and take advantage of free educational tools available through your banking institution or local NGOs. You can use social media carefully to improve your personal finance knowledge. If you feel confused anywhere, take the help of experts.
2. Prepare in advance for unexpected events
More women are nervous about taking matters into their own hands. When you know change is inevitable, it’s even more important to prepare ahead of time. Plan ahead for different life situations, such as moving after marriage, starting a family, deciding to take a break from work, adopting a child, choosing to be a single mother, getting divorced or losing a career. With a supportive husband or family, there may be financial difficulties. So to be successful, you need an advance plan and the ability to make quick decisions.
3. Prioritize investments
Saving money is great. But this may not always be the best option for long-term wealth accumulation. Inflation can reduce the value of your savings over time. If things become more expensive, and your income doesn’t keep up with inflation, your ability to save and spend will decrease. Investment can prevent inflation. They guarantee that a portion of the income will always remain safe. Many women are aware of the concept, but have no idea about the potential benefits. Some are even unsure of their ability to invest properly. Remember, when it comes to investing, women are just as effective as men and their portfolios are often more successful, so prioritize investing as much as possible.
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4. Create a budget based on expenses
Budgeting is the starting point of a good financial strategy. Calculate how much you will need for bills, groceries, school fees, rent and other expenses. Prepare a small monthly spending sheet according to your needs, keep your remaining money aside for emergency fund, travel fund, savings etc. Plan your spending for a specific period of time and keep track of whether you’ve gone over budget.
You can follow up daily and evaluate it at the end of the month.
5. Start saving and building an emergency fund
Set aside a specific amount for savings while creating a monthly budget. Most financial gurus recommend creating an emergency fund for 3 to 6 months’ worth of expenses. Such funds can come in handy in extreme situations like a health crisis, job loss, or family emergency.
You can start saving money little by little by joining The Money Club. The Money Club is a digital chit fund platform which allows you to save money and at the same time earn interest. Chit fund investments are a monthly investing strategy that let you put your extra cash in a safe and convenient place. However, they call for a little bit of financial restraint in our spending right now in order to secure our tomorrow. And when the investments begin to bear fruit, it gives us immense financial security and stability. Consequently, there is no need to rely on any debt instrument to meet your urgent financial needs. You may, withdraw the entire chit money if you want cash during the tenure.
6. Set money aside to support your family
If your family needs financial help, you will do everything you can to help, isn’t it If you spend your long-term investment expecting to start soon, you will have to invest more money later. If you withdraw early, you lose all the benefits of compounding. Of course, you might not want that. Rather than blow your retirement savings, set aside a separate fund. Don’t interrupt your long-term assets for an emergency.
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As we have already mentioned, according to the World Health Organization, women on average live 6 to 8 years longer than men. Therefore, it becomes important to invest for your more enjoyable retirement. Right? Go for a plan that meets all your needs.
As bad as it may seem, don’t trust anyone, not even your children. If they help, that’s great, but if they don’t, make sure you have another plan. Don’t give your home or valuables to your children right away; remember that you can always leave it to them as you wish. Invest in a monthly income plan for retirement. Let’s say you have a monthly income for the next 40 years and are financially secure.
Ladies, do not forget that while earning, it is also necessary to actively participate in its financial planning. Manage all expenses – no matter how big or small. Get into the habit of financial planning as early as possible to lead a financially independent life.