CA Rishabh R. Adukia
Although women constitute a large percentage of work forces today, it is hardly seen that they are active into any financial planning. This is true for even women who have thriving careers and make lots of money through their salaries, business or professions.
Women are natural financial managers. They make budgets and manage them with ease. Never have we seen that the stock of grocery being dried up or a guest has been not treated to an elaborate lunch because he arrived without notice. Women are great at managing risks too. While all of this may be running smooth without any deliberate action, it is essential that women consciously make financial plans for themselves and for the family. It is seen that planning by the woman of the her own finances will make the family’s financial plan stronger to meet goals like buying a dream home, planning for the higher education of children etc. Financial planning is also critical for women to meet their own personal and professional aspirations, without depending on anyone.
Financial planning for women has some important dynamics that need to be addressed. Although women are great at their work and juggle many things, they are drawn towards raising children and other household work. So often they take breaks from their careers to look after their children. This is a critical phase in life of every woman where she compromises on her financial independence to take care of the family. This difficult phase can be dealt with by proving for some passive income that she can derive from her investments made while she was working. In a way we can call it as sabbatical planning. This can be achieved by good and early planning.
If the women is earning in addition to the male member of the family, it is wise to use her income into investments and the primary income can be utilized for meeting the expenses and fixed commitments like education and housing loan. Since women are great at multiplying things, investments made from their incomes go a long way. This can bring a sense of financial confidence to them even when they are on breaks from their careers.
How and where to start:
♦ Insurance policies:
Often it is seen that women ignore very important aspect of financial planning. Buying an insurance policy is very crucial to safe guard against any financial loss due to death. The insurance can provide financial security to your loved ones in your absence. While it is not a necessity to own an insurance policy unless having a financial income on which you have dependents.
This may be planning for vacations, learning a new hobby, taking higher education, doing some charity or starting your own business. Identify and plan the finances to provide for your wishes to achieve. A good financial plan helps you create corpus to meet all your financial goals. Start by investing in mutual funds and build on to your investments as move forward.
♦ Retirement planning
Planning your retirement may be as crucial as making investments at your age. Understanding the financial health and planning for your retirement goals is crucial part of planning for women. Retirement may be phase where you would be free from all the responsibilities and you would want to pursue your hobby or go on a international vacation or a spiritual vacation as per your liking or most importantly provide for medical needs and/or day to day expenses. All this can be achieved with a good financial plan.
♦ Write a Will
It is rarely seen that women make Will of their estates. Will is an important document because it gives you a means to distribute your assets in the manner you like. A working woman may have created various assets during her life time like house, investment in shares, gold, jewellery etc. Even home makers without fixed income have some assets like investments, gold and silver which she may be wishing to pass on to her children. Writing a “Will” will help women in allocating their assets as per their wish. They may provide for their grandchildren’s education or wedding or may want their jewellery to be gifted to anyone particular in their family like daughter or daughter in law or even a niece! But this can be done only by writing a Will. In the absence of a Will the assets will be distributed as per the provisions of the Hindu Succession Act or the personal law of the religion to which she belongs.
♦ And it goes on
So, take Action today-
◊ Identify your goals;
◊ Put financial numbers for corpus required;
◊ Work with or without a financial pundit to explore various investment options to reach targeted corpus;
◊ Keep observing performance of investments and also changes in goals;
◊ If needed, modify your plan.
(The Author is a qualified finance professional and can be reached at [email protected] )