Long gone are the days when a male was anticipated to be the sole breadwinner of a family, while a female was projected to stay and look after the family. Now, both men and women are economically and socially equivalent. The demographics of women have swiftly changed over the past few decades. Women today are now a significant element of corporate and the global business landscape. More and more women are taking charge of business finances and family. This article provides a few financial planning tips for women to help them manage their own finances effortlessly.
How to manage finances?
Following are some of the tips that can help you become financially independent:
Allot a budget
Depending on your income, draw up a tailored budget after taking into account your risk profile, financial goals, and investment horizon. A good way to do so is by adopting the 50-30-20 rule. When you receive your monthly paycheck, allocate around 50% towards necessities and utilities, 30% for savings and investments, and the remaining 20% to live your life queen-size.
Take control of your fixed costs
As the name suggests, your fixed expenses aren’t expected to be changed anytime soon. Fixed expenses include your EMI (equated monthly installment) or rent, insurance, utility bills, etc. Prioritise these costs based on their importance. Prepaying a credit card debt, clearing your debt, moving to a relatively cheaper house are some of the measures that can help you control your fixed expenses.
Limit variable expenses
This is where you need to take charge. From the unnecessary extravagant phone, vacations, and dine-outs to an impulse shopping spree or pampering sessions with your girls, failing to trail variable expenses can push you into a debt trap. No one’s asking you to miss out on all the fun. Though, if you have long-term goals such as or buying a house or starting your own business, you might consider being more cautious with your expenses.
Strategise your tax outgo
Let’s be honest. No one likes to pay taxes, but rather than leaving all to the CA, it is wise to be smart and practical while paying your taxes. With so many different types of investments offering tax benefits to investors, you might get confused where to invest money. Several tax-saving investment options offer a tax deduction of up to Rs 1.5 lac u/s 80C of the IT Act, 1961.
Ensure that you fully maximise these benefits. There are several other exemptions and deductions available to an investor under the old tax regime. Make sure to check it.
Retire like a queen!
Conventionally, women have had shorter working tenure against men, with extended life expectancies. To make matters worse, women are not paid alike. Yes, we are talking about widespread gender pay gap bias. To ensure true financial freedom, we as women need to take matters in our hands.
Firstly, we need to ensure that we have a appropriate health insurance plan in place so that we don’t end up being financially crippled when an emergency strikes.
Next, it’s vital to do a back-calculation on the money required post-retirement, after accounting inflation and taxes. Make sure that your mutual funds focus on achieving these figures.
So, what are you waiting for? Take charge of your financial well-being so that you do not have to depend on on anyone. Understand the importance of investing and start your investment journey. Whether you go ahead with SIP investment or lumpsum investment entirely depends on your portfolio. Happy investing!