Women have made significant progress in challenging stereotypes and breaking through barriers to achieve success in various fields. They are increasingly occupying leadership positions and pursuing their entrepreneurial aspirations. This positive trend can be observed in sectors such as cricket, aviation, space exploration, and even the armed forces in India.
In light of these advancements, financial equality and independence are crucial for women to lead comfortable lives, accumulate wealth, and achieve their short-term and long-term life goals. Therefore, it is vital for women to comprehend how to grow their wealth and safeguard their own and their family's future. Women today are more knowledgeable and acknowledge the fact that making the right investments is the initial step towards attaining financial empowerment.
Nevertheless, many women struggle with managing their finances due to a lack of guidance and appropriate resources. Understanding how to confidently handle money and make it work for oneself has never been more important. The present moment calls for financial literacy, and women should dedicate time to educate themselves about money management and investments. By enhancing their financial awareness and money management skills, women can experience a greater sense of security, which in turn facilitates saving and investing for the future.
Achieving financial independence and building wealth requires adopting various strategies such as saving, budgeting, investing, and planning for retirement. Equally important is the understanding that choosing the right financial instruments aligned with short, medium, and long-term goals, including retirement, is crucial. The cost of living tends to rise over time and is expected to continue doing so in the future, which can diminish the value of savings due to inflation. However, the power of compounding plays a vital role in generating substantial wealth and securing the future. Investments can help counteract the impact of inflation and ensure that savings continue to grow.
Contrary to stereotypes, women are equally proficient in investing and often exhibit even more success in their portfolios. Research has demonstrated that women possess innate qualities that set them apart in their investment approach. They tend to be risk-conscious and prefer a well-researched investment strategy. Women typically lean towards safer and less volatile investments with consistent track records, enabling them to achieve financial empowerment.
To attain financial independence, it is essential for each woman to begin constructing a financial portfolio with an investment plan that considers inflation. Investing today extends beyond relying solely on one's earnings and savings. It now entails exploring tools and instruments that offer compounding benefits and can serve as a safety net for oneself and one's family in the future.
Let us understand what all entails in attaining Financial Freedom –
Budgeting Income & Saving Targets:
Budgeting is a straightforward yet effective method to maintain financial discipline. To start budgeting, begin by listing your total monthly income and categorizing expenses into needs, wants, debt repayments, and savings. The recommended savings ratio is based on age, with a suggested formula of 50-30-20. Allocate 50% of your income to needs, 30% to wants, and 20% to savings and investments.
Building a solid credit score is a crucial step towards financial independence. Timely debt payments are essential as they impact your credit score. It's important to avoid excessive debt to maintain a good credit score. Uncontrolled debt not only damages finances but also contributes to stress, which can affect your health.
Awareness About Investment tools
There are several investing options now that provide both long-term and short-term benefits. Investments like mutual funds or stocks assist in retaining and growing liquid capital during uncertain times, but they also carry a higher risk due to market fluctuations.
Therefore, one must be knowledgeable while dealing with equities. A fixed corpus can be built through instruments like FDs, Employee Provident Funds (EPF), Public Provident Funds (PPF), and the National Pension Scheme (NPS), and returns are compounded over time. Furthermore, life insurance plans like a simple term plan, market-linked ULIPs, or long-term Savings plans might be helpful if someone seeks investment choices to generate monthly or lump sum income.
Two distinct concepts: insurance and adequate insurance
Today's circumstances necessitate readiness. Consequently, having enough life and health insurance in a financial portfolio is crucial. One gains financial security for unanticipated situations by investing in life insurance. It is frequently advised that the life insurance policy chosen should be 10–15 times the annual income.
Your health insurance should include a Mediclaim benefit equal to your yearly income and a critical illness benefit equal to five times your yearly income. Follow the general concept of choosing a plan that offers sufficient insurance coverage against your present salary; this rule changes when your income increases.
Regularly reviewing your financial portfolio
It is essential as it is interconnected with both your personal and professional life. As expenses rise and goals evolve, it's important to ensure that your money aligns with these changes. Conducting an annual review of your financial portfolio helps you stay on track.
The government has introduced several benefits and special schemes that have given a significant boost to women's investments. These include special premium rates, tax benefits, specialized insurance policies, and other government investment schemes. Depending on your financial appetite, risk profile, and time horizon, you can choose from a variety of investment products to enhance your portfolio efficiently. By making informed investment decisions, women can ensure the financial security of their dependents and actively contribute to their family's financial planning process. It is advisable for women to establish a safety corpus that encompasses a diverse range of investments, with insurance playing a crucial role within it.
Comments