The Indian women today are breaking age-old barriers and moving a step up to meet new challenges and embrace new responsibilities, both personally and professionally. They are very well managing their household responsibilities as well as taking huge strides in breaking through the glass ceiling in many industries.
What makes these modern women a symbol of versatility and strength is being financially self-sufficient. In order to establish their own identity and individuality, it is important that they free themselves from financial dependence on their spouse or parents and safeguard themselves from any unforeseen situation. As per a latest study conducted by UBS Global Wealth Management, almost *58% women still depend on their male partners for financial planning.
A well-defined financial plan can help them secure a good life for themselves as well as for their loved ones. Here we list down 7 things that can help women achieve financial freedom.
1. Track where your money is going
It is crucial to track all your cash outflows. You need to list down all your expenses whether it is food, entertainment, shopping, utility payments or loan repayment. Once you know where your money is going, you can prioritise your cash outflows and cut down on unnecessary expenses.
2. Plan your finances
Now since you have sealed the leakage, take very first step towards achieving financial independence by setting realistic goals and having a financial plan to achieve them. A well-defined plan is needed for all your financial requirements, right from securing your child’s education to ensuring a comfortable retired life and safeguarding against medical emergencies. A financial plan is a comprehensive evaluation of your current financial situation, future money goals and a plan to reach those goals.
3. Customise your financial plan
Most women opt for a particular financial plan simply because others are doing so. However, this is not the right thing to do. You must draft a financial plan for yourself, customised as per your financial goals, risk appetite and investment horizon.
4. Start small and move to bigger goals
Every small step that you take towards achieving your financial freedom is a big leap for creating wealth in the long run. You can start by investing a smaller sum of savings from your day to day expenses. With little savings, you build upon the power of compounding which helps you generate solid returns by the time you reach retirement.
To understand this, let us take an example. Let’s say, you invest Rs.10000 every year at 10% interest rate. After a year, your investment would become Rs.11000 and after 2nd year, it would become Rs.11000 + Interest @ 10% of Rs.11000 i.e. Rs.12100. Likewise, after 3rd year, it would become Rs.12100 + Interest @ 10% of Rs.12100 i.e. Rs.13310 and so on.
Hence, compounding interest helps you gain more!
5. Prepare for contingencies
Unforeseen situations often require women to take sole responsibility of their children or parents. In such scenarios, your investments will come to your rescue and cater to your as well as your family’s needs. Therefore, when you make your financial plan, also factor in contingencies and unexpected events.
6. Diversify your investments
As the famous saying goes, “do not put all your eggs in one basket”; you should not invest all your savings in a single investment avenue. It helps you distribute your risk over a variety of investments. You can balance a high-risk investment offering good returns with a low-risk investment offering average returns. There are a few financial plans available which give you such flexibility.
7. Insurance is an important choice to make
Traditionally, women have always had a conservative approach towards personal finance, as compared to their male counterparts. They are mostly covered in family floaters in policies held by their husbands. One of the major reasons why a woman does not opt for insurance is because she never considers herself that important to buy a cover. However, insurance is not just for men; even women need to get insurance.
Irrespective of how much you earn or have as savings, it is important to have an adequate insurance cover in order to ensure that in your absence your family does not go through any financial stress. Moreover, an insurance policy can help you fund your day-to-day expenses at a later stage.
A good investment and insurance plan like HDFC Life Click 2 Wealth can help you protect yours as well as your family’s future by ensuring financial continuity. You can choose a plan from the three available options based on your requirements and enjoy benefits such as market linked returns, partial withdrawal, settlement option, maturity benefit, death benefit, fund boosters and many others.
The above-mentioned points will help you achieve financial freedom and safeguard you against unforeseen circumstances.
This is a partnered post by HDFC Life.