Gone are those days when a man was expected to be the breadwinner of the family, and a woman was expected to stay at home and look after the household. Today, men and women are socially and economically equal.The demographics of women have rapidly changed over the last few decades. Women are now a prominent component of corporate and the global business landscape. More women are taking charge of family and business finances. This article aims to provide a few healthy tips on financial planning to women.
Tips on financial planning
Following are some of the tips that can help you become financially independent:
- Allocate a budget
Based on your monthly income, draw up a personalised budget considering on your financial goals, risk appetite, and the desired investment horizon. An excellent way to start is by following the 50-30-20 rule. When you receive your paycheck each month, allocate about 50% towards necessities, 30% towards savings and investments, and the rest 20% to live life queen-size.
- Take charge of your fixed expenses
As the term suggests, your fixed expenses aren’t likely to alter anytime soon. These include your rent or EMI, utility bills, insurance, etc. Prioritisethese expenses based on their importance and set a limit in stone. Prepaying a loan or credit card debt or moving to a relatively cheaper house can help you control your fixed expenses.
- Restrict variable expenses
This is where you need to rein it in. From the unavoidable phone, travel, internet services, and food to night out with the girls or an impulse shopping spree or pampering sessions, failing to track variable expenses can lead you into a money pit. You donot have to miss out on all the fun. However, if you have long-term financial goals such as starting your own business or buying a house, you should consider being more judicious with your money.
- Plan your tax outgo
Let’s be candid. Nobody likes paying taxes, but rather than leaving everything to the CA, it is wise to be more smart and proactive while paying your taxes. There are different types of investments that offer tax benefits of up to Rs 1.5 lac under Section 80C of the Income Tax Act, 1961.
Ensure that you fully maximisethese benefits. If you are a homeowner, you can claim further deductions.
If you are an entrepreneur, remember to save all your bills on travel, food, and accommodation.You can claim these expenses and reduce your tax liability to an extent.
- Retire like a queen!
Traditionally, women have had shorter working termsthan men, with longer life expectancies. To add fuel to the fire, women are not paid equally. Yes, we are talking about pay gap bias. To ensure financial freedom, women need to take matters in their hands.
Firstly, ensure that you have a proper health insurance plan in place so that you don’t end up financially crippled in case of an emergency.
Next, do a back-calculation on how much money you would need post-retirement, after taking inflation and taxes into account. Your investments and tax-planning investment options should focus on achieving these figures.
So take charge of your financial well being and become financially independent, so that you don’t have to rely on anyone.Realise the importance of investing and begin your investment journey ASAP. Happy investing!