Financial planning for women should address specific needs
Read in: 3mins, Published On , 7 Sep 2018 By TOI
When it comes to financial planning, there are some factors which are common to men and women, both. Also there are some issues which are specific to women which are to be addressed very differently. Mrin Agarwal, cofounder, Womantra, a financial awareness initiative among women, writes about four of the important aspects that women should keep in mind while they plan out their long term finances.
BUYING HEALTH INSURANCE
While buying a health insurance, you should check the exclusions in the policies carefully. The ones that come at a lower premium compared to others usually exclude certain illnesses like kidney stone, appendicitis, hysterectomy etc. for the first 1-2 years.
PLANNING FOR RETIREMENT
If you are married, talk to your spouse about making a financial plan with a financial planner. In case of couples, some goals may differ and the approach to investing towards the goals may differ. Also a woman cannot automatically assume that the husband has done financial planning or is investing in the right instruments. So it's necessary to be act on a retirement plan decisively.
If you are single, hire a financial planner who will help develop a financial plan. The key focus must be on building a good retirement corpus by the time you reach 45-50 years of age. This is because a large number of people prefer to move on from corporate jobs by that age.
WOMAN AS A MOTHER AND AS A CHILD
As a mother, while planning for a corpus for children's education is important, mothers also need to focus on instilling financial consciousness in children. As is seen these days, teenagers and young adults tend to focus on lifestyle spending. They also prefer to take loans for fulfilment of their needs, rather than saving. As a mother, you can help develop better financial habits in your children through their own actions of 'value for money', getting children to stick to their pocket money budget and not giving in to every demand from the child.
I also see more and more women taking responsibility of their aged parents. While planning your finances, it is important that you also build in some amount for expenses that could be incurred for your parents. Obviously, health insurance for the parents is a must. For this, you can consider creating a corpus for your parents and can start investing for it when your parents turn 45-50 years.
TAKING A SABBATICAL
In order to do this, you need to start planning at least 3-5 years in advance. Generally, what I see is that the decision to take a sabbatical is impulsive and people feel that since they are earning well, they would have enough to sustain them through a break. However, they forget that while they earn well, they may not be saving equally well. Hence to take a sabbatical, you need to firstly be saving and investing at least 30-40% of your income. And you also need to check if the income from your investments would be enough to see you through your years when you take the break. You also should work on a Plan B to generate income and keep yourself mentally engaged and occupied.