Why financial planning is a must for womenBack
6 Aug 2019, 16:30 — 7 min read
Background: To ensure that your money grows, that you have enough savings for a rainy day and retirement and for overall peace of mind and independence, financial planning is a must. Women must embrace financial planning as a necessary requirement to lead a happy and prudent life. Rishabh Adukia in his previous article shared the importance of writing a will. Here he explains how financial planning for women differs from that of men and how women must focus on sound financial planning for a secure present and future.
Although women constitute a large percentage of the workforce today, they are not as active in financial planning as their male counterparts. This is true for even women who have thriving careers and have a sizable income through their job, business or profession.
Women are natural financial managers. They make budgets and manage them with ease. We seldom see the stock of grocery being dried up or a guest not being treated to a hearty meal because they arrived without notice. Women are great at managing risks too. While things 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 solid planning by the woman of the house of 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.
How financial planning for women differs from men
Financial planning for women has some important dynamics that are different from that of men and therefore need to be addressed.
- Women may have different priorities
Although women are great at their work and juggle many things, they might also be 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 a woman’s life where she might compromise on her financial independence to take care of the family. This phase can be dealt with by providing for some passive income that she can derive from her investments made while she was working. In a way this can be referred to as sabbatical planning. This can be achieved by good and early planning.
- Gender pay gap
In India, women earn 19% less than men for the same job, reflecting the gender pay gap. Therefore, women are able to invest and save less than men.
- Life expectancy and healthcare
The life expectancy of women is more than that of men. This means that women have to make their investments last longer. Because women live longer, their healthcare costs are also correspondingly higher.
- Women are better investors
When they do invest, women are better investors than men. If a woman is earning in addition to the male member of the family, it is wise to use her income for investments, and the primary income can be utilised for meeting the expenses and fixed commitments like education and housing loan. Since women are great at multiplying things, investments made from their income goes a long way. This can bring a sense of financial confidence to them even when they are on a break from their career.
- Insurance policies
Often it is seen that women ignore a very important aspect of financial planning. Buying an insurance policy is very crucial to safeguard against any financial loss due to death. The insurance can provide financial security to your loved ones in your absence. It is not a necessity to own an insurance policy unless you have a financial income on which you have dependents.
- Writing a will
It is rarely seen that women make a will of their estates. A 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 lifetime like house, investment in shares, gold, jewellery etc. Even homemakers without fixed income have some assets like investments, gold and silver which they may wish to pass on to their children. Writing a will helps women in allocating their assets as per their wishes. 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 a daughter, 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.
Financial planning a must to provide for life goals
Planning for every stage of life is extremely important. This may be planning for vacations, learning a new hobby, pursuing higher education, doing some charity or staring your own business. Women can plan their finances to provide for everything they wish 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 you move forward.
Planning your retirement may be as crucial as making investments. Understanding the financial health and planning for your retirement goals is a crucial part of financial planning for women. Retirement may be phase where you want to be free from all responsibilities and you would want to pursue a hobby, go on international vacations or spiritual retreats. All this can be achieved with a good financial plan.
Financial planning is a key requirement for a fulfilling life. It is wise to go that extra mile to plan for a secure financial present and future.
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Posted byRishabh Adukia
NINECUBE was found at the request of various HNI’s who were in need of a knowledgeable and independent financial firm who can help them let the money work, and not they working...
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