Gone are the days when only men were expected to be the ones who managed all the finances of the family. Women today are becoming more and more financially independent. Today’s generation of independent and working women have made enormous progress in their personal and professional lives. By carefully managing your money, you too can plan for the future while enjoying the present. Below are some of the ways for young women to manage their money better.
Create a budget
Women are pro at budgeting and managing household finances for the longest time. They have always managed to save with the limited amount they have. So, that is something you have to start with, which you know the best, create a realistic budget and stick to it. For creating a budget make a list of all your incomes and expenses. It should be created in accordance with your priorities and goals in mind and the time frame within which you want to achieve them.
Set A Financial Goal
It is essential to financial goals. It will help you to create concrete targets to work towards. Set both short-term and long-term goals. Short-term goals are objectives that can be achieved within one year and Long-term goals require more effort, and could take several years to achieve. Make sure your goals are realistic and attainable, it will always give you a push to achieve them.
Pay off Debt
Debt is a huge financial burden. Having debt can get in the way of meeting financial goals, not only does it affect your current budget, but also your savings for the future. It is important to take your debt seriously and make it a priority to pay off your debt as soon as possible. To avoid debt the best way is to create a financial plan and stick to it. Excessive debt can have serious implications on your financial, physical and mental health.
Saving money is a sensible thing to do, but if you want to build long term wealth, then investing is the key to it. Investing over a long period of time can generate unimaginable returns. Investing can lead to more financial security, planning for the future and attainment of financial goals.
Build an Emergency Fund
An emergency fund is money that you keep aside for any emergency or uncertain events. As per the general rule, save three to six months of your expenses. But for a woman, the size should be a little bigger, simply because women tend to take longer sabbaticals due to various reasons (in general). Make it a priority to put money in emergency fund every time you get a paycheck. Putting small amounts every month could help you build a decent sum of money, if you can’t afford to save large lump sums.
The role of women is changing and with this change, women also face an increased risk of health issues. The first step towards protecting yourself would be to get insured. Every working woman should ensure that they have enough life cover to safeguard their financial dependents against any eventualities of life. You could also opt for an insurance plan that also acts as a saving opportunity like an endowment plan or you could choose ULIPs that give an investment opportunity along with a life cover. It is advisable to take insurance cover at an early age as the premium for term insurance increases as the age increases.
Save for Retirement
Retirement planning is one of the most important life goals. The saving and spending pattern of men and women are different. Women have to interrupt their careers to take care of family responsibilities leading to shorter working tenures compared to men. Therefore, retirement planning for a woman is actually more important than it is for men, women should prioritize retirement, saving early in their professional lives. The sooner you start saving, the longer you’ll have to multiply your money through compound interest.
The author is Senior Vice President, Master Capital Services.