Wealth Guide: Women’s Day Special – Women have worked hard to make their mark in all spheres of life. Their journey, from being confined to their roles as daughters, sisters, wives and mothers to being global role models, has been phenomenal and inspiring. Today, more women around the world are joining the workforce, advancing in their careers, and inheriting wealth, thereby gaining control of an increasing amount of wealth. However, owning a large sum of money does not always guarantee financial independence. To help you with the same, Radhika Binani, Product Manager at Paisabazaar.com, shares some tips that women should follow to become financially independent:
1 – Be financially confident
Radhika Binani advises: “Earning more money does not give you financial independence, developing skills to manage it responsibly does. Most women depend on others to manage their finances because they lack proper financial knowledge and therefore confidence to make sound financial decisions. Anyone who is willing to learn can start by reading financial literature. Having financial-related conversations with parents, partners, or even financial advisors will gradually give you the confidence to make financial decisions independently. Last but most importantly, ask questions as much as you can, because if you don’t ask, you’ll never know.”
2 – Prepare to face financial emergencies
“Financial contingencies, which can temporarily interrupt your regular stream of income, such as sudden job loss, accident or serious illness, can jeopardize your financial goals. Having an adequate emergency fund, ideally equal to at least six times your monthly recurring expenses, can help you overcome such demands. For consistent interest income and capital appreciation, you may want to consider parking your emergency funds in high-yield savings accounts or short-term debt funds,” suggested Binani .
3 – Buy adequate health and term insurance coverage
“Acquiring adequate life insurance coverage is essential to protecting your family from life’s uncertainties. In the event of your untimely death, your term insurance will protect your family by providing replacement income. This will help your dependents pay EMI, cover living expenses, and continue financial contributions toward crucial financial goals like children’s higher education, retirement, etc. Ideally, your life insurance coverage should be at least 10-15 times your annual income. However, many end up confusing insurance with investment and thus purchase life insurance products such as cash back, endowment insurance plans, and ULIPs, which offer inadequate life coverage and sub-par returns. Opt for term insurance plans instead, as they offer much larger life coverages for very low premiums,” he added.
“Considering the ever-increasing cost of health care, a single hospital bill can wipe out your life savings. It just wouldn’t be enough to rely solely on your savings or your employer’s group health policy. You can choose health policies designed specifically for women, or opt for regular health insurance policies that offer childcare and maternity benefits, or choose a floating family plan if you have dependent family members Keep in mind that both health insurance premiums and Term insurance companies offer tax benefits under Sections 80D and 80C of the Income Tax Act, respectively,” he advised.
4- Prepare a financial plan
“To design a solid financial plan, it’s important to first identify and prioritize specific financial goals. Doing so will help you make investment decisions based on your risk appetite and investment horizon. Also, make sure every investment you make is linked to a specific objective. Also, remember that in order to accumulate the required corpus, each of your financial goals, be it buying a vehicle, a house or accumulating a corpus for retirement, require timely investments in the right investment instruments”, he added.
5 – Take steps to build your credit score
“Credit scoring is essential to meeting loan eligibility criteria and, in some cases, to securing a job. Therefore, you need to take the proper steps to build your credit score. Women who are new to the credit card bills can boost their credit scores by paying their credit card bills before they are due and in full, keeping the credit utilization ratio within 30%, and avoiding multiple applications for credit in a short period of time. don’t get regular credit cards may want to consider using a secured credit card. Since it’s issued against your fixed deposit, it comes with less stringent eligibility criteria,” he said.
6 – Don’t ignore retirement planning
“In your 20s and 30s, retirement seems decades away, and before you know it, other life goals, like buying a home, a vehicle, or amassing corpus for your child’s higher education and marriage.” son, they often take center stage, thus taking us even further away from developing a retirement plan.Ignoring the need to build a retirement corpus now forces most people to strain their finances in later years. Therefore, one should start investing for retirement as early as possible.This will give your money more time to benefit from the power of retirement.Also, when estimating the target corpus, remember to factor in the cost of inflation and the risk of longevity as well, to avoid the accumulation of an inadequate corpus”, he concluded.
(Disclaimer: Any opinions/suggestions/advice expressed here in this article are solely those of investment experts. Zee Business suggests its readers consult with their investment advisors before making any financial decisions.)