Financial Planning For Women in Order to Get the Best RoI

For a long time, financial planning and investing were thought to be men’s jobs, and most women relied on their parents or husbands to take care of their money. Even though the number of women who help pay the bills has grown a lot in the last ten years, this is still the case.

Also, financial planning and analysis can be hard for women in certain ways. These problems need a fix so that they can live a financially independent life as a woman without stress and do their own personal financial management.

Wells Fargo (Women and Investing, 2022) and Fidelity Investments (Women and Investing, 2021) have done global studies showing that women are more cautious about their investment planning.

They usually invest in things with very low or no risk, like gold, fixed deposits, and the public provident fund. They avoid mutual funds and stock markets. Some people have used stock markets, but they still have a long way to go.

Why Is Financial Planning Important?

In the past, it was not as important for women to be involved in money matters. Over time, people’s ideas have changed because women in India are becoming financially independent and choosing ambitious and unusual jobs. Men and women are on the same level today in society and the economy.

Even though more and more women make financial decisions at home, some still rely on their fathers or husbands for help with money, investments, and financial planning. It is time for women, whether they are single, married, divorced, or widowed, to take charge of their finances.

Here’s How To Do Your Own Financial Planning

1. Know What You Have

How often do you meet women who know everything their husbands do with insurance and investments? Most of the time, male members don’t bring up these topics on their own, and even when they do, women are not all that interested.

Men and women both need to change their minds about this. The recent pandemic made it even more important for family members to know about the breadwinner’s personal financial management and investment planning.

There have been many cases where the earning member died too soon, but his family could not get the death benefit from his insurance policy because they did not know about it. Do you know that the Life Insurance Corporation alone has more than Rs 21,500 crore in unclaimed money? Obviously, this is a big, important problem.

So, think of this as the beginning of your journey with money. The first thing you should do for financial planning is sit down with the person in your family who makes financial decisions and find out exactly what investments and insurance your family has.

2. Organise

People think that women are better at putting things together than men. They can also use this skill to handle their own money in the best way possible. For example, many disciplined investors do not keep their financial records in a way that makes them easy to find and read.

So, they often miss the dates when they need to renew. As you learn about your family’s insurance and investments, gather and organize all the related documents, whether paper or digital.

Also, write down the dates when you need to renew so that you don’t miss any dates in the future. This step for financial planning and analysis is crucial.

Also, you might want to look through the pages to ensure everything is up to date. For example, insurance contracts are long-term, and it is possible that your address or contact information has changed or that the nomination needs to be updated over time. Check these details and, if you need to, get them updated.

3. Check For Insurance

Insurance saves you money if something happens to the person who brings in the most money. Insurance ensures that if one of your family members dies and you stop making money, you can still pay for the things you need.

So, as you organize and update your financial documents, be sure to check how much the insurance covers. As a general rule, every earning member should have term life insurance with a sum assured equal to 10–12 times their annual income. If that’s not the case, the insurance coverage needs to be raised.

Getting insurance is not a difficult task. Rather, it is not hard to understand. Just choose a term insurance plan that has a good mix of a low annual premium and a high claim-settlement ratio compared to its peers.

On the websites of several insurance aggregators, it is easy to find this information. You should only choose TERM insurance, which is worth saying again. This is one of the important steps for financial planning and analysis.

4. Emergency Fund

An emergency fund is a money you set aside in case you have to pay for something unexpected, like a sudden trip to the hospital or the loss of your job. Being ready for a rainy day is the best thing you can do.

You always keep a few extras of the things you need in your house, right? With money, you should do the same. So, check to see if the money you have stored safely in your cupboard and in your bank account is enough to cover your bills for eight to twelve months. If it is not, get it there as soon as possible.

When you finish the four tasks above, you will have built a strong foundation for your personal financial plan. Often, conversations about money and financial planning lead right to investing and making money. But keep in mind that even the best investment plans can fail if they do not have a strong base.

So, once you start taking care of your family’s money, give yourself enough time to do all of the above things and get your house in order. In the end, it will make a great start possible.

5. Target For Monthly Savings

Now is the time to start thinking about your budget and how much you spend. The most important parts of good financial planning are making a budget and keeping expenses in check.

In fact, any talk about investing is pointless until there is a lot of discipline to keep costs down. Again, the women of the house usually have more power in this situation. Since women have been good at managing household budgets for a long time, they should use this skill to plan their own finances.

Sit down with your husband and talk about your hopes and dreams for money. There are a lot of online calculators that can help you figure out how much you need to save each month to get to your goals.

Once you know how much you want to save each month and how much your essential (non-discretionary) monthly house costs are, you’ll know how much you can spend on non-essentials.

For better financial planning, check how you are doing compared to your goals for saving, spending on necessities, and spending on things you want. Find leaks that need to be fixed right away and stop them.

For example, carrying a balance on a credit card is a clear warning sign. Give yourself a couple more months to figure out your monthly budget and make sure you are saving enough.

Investment Planning For Women

When you first start personal financial management or financial planning in general, do it in a way that helps you get the best RoI (return on investment) and bang for your buck. Even though everyone is very busy, women often have to balance work with their responsibilities at home.

This might make it hard for them to look at their portfolio every day or once a week. On the other hand, some women may find that they want to take a more active role in managing their portfolios.

No two investment portfolios are the same, which is why it is important to be aware of how much time you can commit, which in turn can affect your investment choices. Read on to find out about some of the best ways to invest your money.

1. Exchange Traded Funds

There was a time when investment planning in the stock market required a lot of research and was out of reach for most women. ETFs are mostly made up of a basket of securities that look at all kinds of assets, such as stocks, bonds, commodities, currencies, and debt.

You can buy a share of that basket, just like buying shares of a company. ETFs are traded on the stock exchange, and they combine the ease of trading stocks with the diversification benefits of mutual funds.

2. Mutual Funds

Mutual funds are a good choice for any investor and financial planning, no matter how much experience they have. As a woman, you need a tool that makes it easy for you to spend your money wisely based on your goals.

If you have never invested before, you can start with a simple investment plan (SIP). It lets you invest a certain amount of savings each month. The amount will be taken out of your account automatically each month, making it easier for you to stick to your investment plan.

3. Stocks

Stocks, which are also called equities, are small pieces of a company. When you buy a share of a company, you become a small owner of that company. People can buy and sell stocks in some of the biggest companies in the world today.

This is usually thought of as a riskier asset class because stock performance can be unpredictable at times. Why does this happen?

The price per share of a company depends on a lot of things, like its balance sheet, its management, and so on. But stocks also have the chance to bring in very high returns. This makes financial planning and investment very beneficial.

Because of how much their prices can change in a single day, not every woman may want to invest in this asset class. Most of the time, they need more attention and active rebalancing, which can take a while.

Mistakes To Avoid

1. Too Much Risk Aversion

Women are known to be much more patient investors than men and to be better at managing risks. But if you invest too cautiously, you could hurt your long-term performance and miss out on returns that are comparatively and significantly higher.

This is one of the serious mistakes to avoid during financial planning, as per the financial advice.

2. Giving Control To Your Partner

Many Indian women still let their partners make investment decisions. This puts them at a huge disadvantage because they don’t know about the family’s assets or investments. If you really want to be on your own, you need to have your own personal financial management as per the financial advice.

3. Overboard With Gold

Gold has been one of the most popular ways for Indian women to invest for a long time. But women shouldn’t buy too much gold. Instead, they should look for other ways to invest in diversifying their portfolios. This will also help you pay attention to your financial assets rather than just your physical ones.

4. Limiting Money To Fixed Deposits

Women in India also like to put their money in a savings account or, best case scenario, a fixed deposit. The low-interest rates mean that you can’t store more than a certain amount of money in these. That money might not even be enough to keep up with inflation, which would be bad for growth.

So, the best way to keep some cash on hand and money for emergencies is to use savings accounts or fixed deposits. The rest of the money could be put into growth funds.

Conclusion

At first, financial planning and analysis might seem like a lot of work, but once you see your money grow, you won’t be able to stop. There is a lot of information and financial advice out there that can help you get started in the world of investing.

As a woman, you have the power to invest your money in a way that is patient, smart, and efficient. This will not only help you reach your financial goals, but it will also put you on a path to growth and new opportunities.

Whenever you have questions about how to invest, remember that asking for financial advice is one of the best things you can do. There are no stupid questions, and the doubts you have now are probably the same ones that other people had when they first started out. What counts is getting started.

Author Bio:
Jahnvi Garg is an expert content writer who writes blogs on niches like women’s fashion, beauty, health, empowerment, feminism, finance, etc. She is experienced in writing blogs related to the same niche. She has also gained experience in resolving issues and queries related to the daily problems faced by women.