Tips for financially smart moms

It is said that God couldn’t be everywhere so he created mothers. That’s a nice saying but it is not quite true. In fact, the reverse is true. If you take a look at mythology, it is abundantly clear that mothers created gods in all the stories. Being a mom is a 24-hour job by itself. And in addition to that, a lot of moms are active jobholders these days. They are financially independent and their income adds a considerable amount to the family’s household budget.

In this article, let’s explore some of the steps that moms can take in order to manage their finances.

1) Take charge of the family’s financial well-being

Your twelve-year-old son wants a new pair of shoes for basketball. Sure, that sounds like a reasonable expense. But a hover board so that your son can move faster from the bedroom to the kitchen? Absolutely not! That sounds like an extravagant gift for his birthday and should be given only if he has been at his absolute best behaviour throughout the year.

Some expenses are necessary and others are simply a waste of money. Mothers are aware of the different needs and requirements of the family. Track the family spending habits to ensure that money is being utilised in the most efficient manner.

2) Invest to achieve financial goals

It is important to plan on a week-to-week basis. Groceries, household bills and other expenses are important. At the same time, long-term planning is necessary too. You also need to plan for stuff like renovating the home after three years or financing your son’s college education after five years. And to achieve these goals, it is important to invest.

There are a lot of different avenues that mothers can invest in. Provident funds, pension plans, mutual funds, bonds, stocks are a few good options. If you haven’t already started, a good way to begin investing is through mutual funds. Based on your investment requirements and risk profile, you can carefully invest in different types of funds to increase the wealth of the family.

If you have long-term financial goals and you want high returns, investment in equity funds can be the answer. On the other hand, debt funds are more suitable for short-term goals. You can opt for balanced funds if you want to diversify your investments.

3) Awareness regarding investment returns

When it comes to investments, having knowledge of all the different aspects of investing can be quite useful. For example, the capital tax implications on investment returns differ widely based on how long you have held the investments.

For example, debt funds held for less than three years are subject to STCG tax. The tax you pay is based on your income tax slab. Beyond that, debt funds are eligible for LTCG tax at the rate of 20% after indexation. Equity mutual funds held for one year or less are subject to STCG tax of 15%. If the holding period exceeds one year, LTCG tax is applicable. Until recently, equity funds were exempt from LTCG tax. But this year’s budget proposed a tax of 10% if gains exceed Rs 1 lakh. Being aware of these features and changes can help you adjust your investment decisions and maximize the returns for the family.

4) Plan for the unexpected

The unofficial motto for mothers is: always be prepared. With kids around, anything and everything can go wrong; and moms are typically ready to take care of the situation as smoothly as possible. It is necessary to have the same attitude with respect to finances. It is important to create a savings fund for emergency situations that could arise in the future. At such times, having a cushion of money can be immensely useful.

To sum up

By taking control of your family’s well being and investing wisely, you can gain higher returns for the family. This, in turn, can help your family have a better standard of living over the years.

Categories: Finance


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