As a woman, you have a lot of responsibilities. But your duties increase manifold when you are the sole or prime caretaker and provider of your family. In such a case, it becomes extremely important for you to plan your finances well so that you always continue being their strength.
Here are a few financial tips for women like you :
1. Be financially savvy
To become financially strong for yourself and your loved ones, being financially savvy is a must. With your hard-earned money at stake, it becomes imperative for you to stay updated about things that concern personal finance. This includes opening bank accounts, investing on your own, making insurance claims, etc. Moreover, financial awareness is extremely important for you so that you don’t fall prey to any monetary scams. You must never share your passwords or ATM pins with anybody or anywhere. You must ensure that your registered mobile/email id for all financial communications is updated. Also, before giving your consent for anything, you must always read the terms and conditions carefully.
2. Assess your financial state
You may not have been single or laden with responsibilities since the beginning. But now that you are, take stock of your finances once again and know where you stand. Being aware of your financial condition will help you plan your finances well.
3. Re-prioritise your goals
Take stock of your financial priorities. List down and classify all of them into short-term goals such as buying a laptop, medium-term goals such as funding a wedding and long-term goals such as ensuring a peaceful retired life. Create a separate plan for meeting each of them.
4. Chalk out a budget
Along with noting down all the sources of your income, list down all the expenses that you all incur or are likely to incur. A budget will give you a bird’s-eye-view of your finances. You can then decide where and how to spend.
5. Secure your family
Your family is important to you. Ensure you buy adequate term insurance cover for yourself so that their life continues without any financial hiccups even in your absence. You must also have a health insurance policy for yourself as well as your dependents so that medical emergencies don’t drain your savings. An added advantage of both these types of insurance is that you can claim tax deductions.
No goals, no needs, no wants will be met unless you have money. Thus, prioritise saving diligently. To ensure regularity in your efforts, automate your savings.
Savings won’t grow at home. Keeping them in a savings bank account won’t help either because the returns are low. So, look for investment options that can help your money grow. You may opt for Mutual Funds through Systematic Investment Plans (SIPs). There are different Mutual Funds to suit different requirement. You can prioritize and plan investment for your and your dependents needs. Also, when you invest through SIPs, you tend to become financially disciplined since a fixed sum of money gets deducted from your bank account every month and, in turn, gets invested in the fund of your choice.
By opting for SIPs, you are automating your saving and investing process and sparing yourself the time and efforts needed in doing so.
8. Stay away from debt
Try to avoid taking loans and credits as much as possible. Growing dues can ruin the financial peace of your family. Even a seemingly small % of the interest can turn into huge sum overtime and push you into the dark trap of debt.
9. Be prepared for emergencies
Life is uncertain. Thus, it is in your best interest that you prepare well for any kind of emergency. To build your emergency fund, you can start by setting aside some amount every month. Ideally a person should keep aside 6 months living expense for emergency. Next, you can invest in Overnight Funds to earn reasonable returns on the sum in a relatively safe manner. Such funds are highly liquid and you can get access to cash quickly. Usually, the redemption requests are processed within one business day.
10. Plan your taxes
Taxes eat into your hard-earned income. To increase your take-home salary, aim to reduce your taxable income. By investment in Equity Linked Savings Scheme (ELSS), it helps to reduce your taxable income by up to Rs 1.5 lakh per annum . You can, thus, save up to Rs 46,800* in taxes every year. Moreover, since ELSS is an Equity-oriented Mutual Fund, it may have the potential to perform and deliver in the long run. This may help you build wealth too.
11. Plan your retirement
You need a source of income even after you retire to sustain your lifestyle. Moreover, you may have many things on your retirement bucket list such as pursuing a hobby or constructing a farm house. The golden years of your life will give you enough time to knock these off the list. But, to be able to enjoy these, your mind should be free of any financial worries. Thus, retirement planning is important. When you start investing for your old age right from a young age, you give your investments the time to grow through the power of compounding.
12. Make a will
No human is immortal. Since you are primarily responsible for the well-being of your family, you must make provisions for their future too. So, think ahead and make a clear will. Also, update your nominee names wherever required. This ensures that your family does not run from pillar to post to inherit your assets when you are not around.
To sum it up
Nothing is difficult if you plan well. This also applies to your finances. These financial planning tips can help you have better control over your finances. This, in turn, can help you fulfil all your financial responsibilities with ease.
*The old tax regime allows you to save tax on investments up to Rs.1.5 lakh annually, under Section 80C of the Income Tax Act, 1961. However, you will not be able to claim such a deduction if you opt for the new tax regime.
(Tax Disclaimer - As per the present tax laws, eligible investors(individual/HUF) are entitled to a deduction from their gross total income, of the amount invested in equity-linked saving scheme(ELSS) up to Rs 1,50,000/-(along with other prescribed investments)under section 80c of the Income Tax Act,1961.Subject to prevailing tax laws.
ELSS- Equity Linked Savings Scheme (ELSS) is an open-ended equity linked saving scheme with a statutory lock in of 3 years and tax benefit. Minimum investment in equity & equity related instruments - 80% of total assets (in accordance with Equity Linked Saving Scheme, 2005 notified by Ministry of Finance))
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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