The Woman’s Guide To Taking Charge Of Your Finances

Women today are more educated and successful than ever before. In line with this, more and more women are realising their independence, by reinventing their professional and personal lives. However, an important factor sustaining this reinvention of women is the ability to take charge of their own finances. To help you – as a woman – do the same, here are some points worth considering:

• Have an articulation of your goals:
  Having a clear articulation of your goals is one of the first steps in developing a comprehensive financial plan. It is only when you have an understanding of your current position with respect to your future goals, can you devise a strategy to achieve them efficiently.

•  Establish authority over your finances:
  Regardless of whether you work or not you should have money to call your own, and invest towards the achievement of your goals. Establishing authority over your finances is an important part of gaining confidence to make good financial decisions. Suppose, you do not have your own income, and depend on your family or spouse, demarcate a portion of the investments in your name. If you are employed, start working on a financial plan that enables you to start saving and investing as early as possible. It is only then that you can truly use the power of compounding.

• Create an emergency fund:
  Accidents and emergencies are unpredictable but usually require a quick response. Furthermore, an event like losing your job or incurring a large unexpected bill can put a sizable dent in your savings or force you to take on debt. To prepare for such scenarios it is pivotal that you create an emergency fund amounting to 3-6 times your monthly expenses, primarily composed of liquid cash. This can help you ensure that your finances are secure in the event of any contingency.

• Diversify your investments:
  Many studies show that women are conservative investors and prefer assured returns even if it means less growth when they are in the accumulation stage of their investing years. This often leads them to investing largely in assets like real estate, gold and fixed deposits – hoarding wealth, which could have been put to better use. In addition to mitigating risk, diversifying your portfolio also allows you to make the most out of your finances. In this sense, you should make contributions towards stocks, bonds, mutual funds and other similar kinds of assets. Here it is good to remember that the early stage of your career is when you can afford to take the most risks, like investing in equity, that can pay-off in the long run.

• Make sure that you have enough insurance:
  While the different types of policies you will end up purchasing may vary based on your needs, you should never avoid it altogether. You must have basic coverage of at least health insurance. Purchasing a life insurance policy (preferable term insurance) is crucial if you have someone dependent on your income. If you own any property or vehicles, you should get them covered as well.

• Put your retirement planning first:
  Despite your relationship status, it is imperative that you plan for your retirement independently. It is a misconception that a combined plan for you and your significant other will suffice for a comfortable retirement. A comprehensive retirement plan is multifaceted, and shifts focus based on the period of life you occupy.

Subsequently, working with a professional advisor will definitely benefit you when it comes to financial planning. Consulting a certified and experienced financial planner or wealth management firm has become extremely affordable and will ensure that you don’t make any costly mistakes.