Growing up in an Indian household means leaving the nest late, sometimes not until after 30 years of age. Indian kids grow up with a greater sense of financial security than those in other countries as independence is not expected, and in some cases even held back, from them until the age of marriage. This results in poor understanding of financial management.
The problem is heightened for young Indian girls as our society is still crawling out of traditional roles of men and women. Financial management as an essential skill is considered irrelevant for women as most are still not expected to work.
Thankfully, the situation is taking a turn for the better as more and more women are breaking the glass ceiling in the professional sphere. Young women are now seeing financial independence as indispensable in the planning of their future.
However, the coddling of the Indian household is still prevalent and women need to learn to manage their freedom better.
Here are a few suggestions to get you started into the journey of managing your finances like an absolute professional.
Read and learn about finance
Some people are natural with numbers and organisation while the rest of us suffer but fret not. What you need is guidance from those who have already played the game. From books to videos on the internet, resources on personal finance are abundant. If research is not your cup of tea, you can always speak to other women, or men, in your circles. But don’t ignore your ignorance as it can be hazardous to your financial future.
Have a plan
Planned investment is the way forward, ladies. This has to be the first thing you need to tick off your list. They say the bigger the gap between saving and spending, the better it is, and rightly so. You don’t have to create a sturdy five-year-plan, even though that’s ideal. You should have a simple plan in place that lets you define your long-term and short-term goals and helps you create a balance between your wants and needs. This gives you a monetary cushion that comes in handy when you’re short of finances.
Once you start seeing the saved numbers in the bank, you’ll only be motivated to save more. At that point, you can trust the inertia to keep you comfortable.
It’s important to invest wisely
Investing your money is the best way to let it grow while it’s safely locked up. There are a number of schemes available where you don’t even need a job to start your investment. For instance, PPF (public provident fund) gives you the option of investing an annual sum ranging anywhere between Rs 500 to Rs 1.5 lakhs, with an annual interest of 8%. This investment plan is not only risk-free but also helps you save on tax which makes it one of the most sought-after savings plan.
If you’ve just started working and are looking for a safe plan to go with, try SIPs. They are relatively safe and let you start with a small amount which you can then build on with the returns. To invest intelligently, we suggest you put in the time to read about the current schemes in the market before putting your money into any.
Keep in mind that safe investments are always a slow and steady process but reliable and worth it in the future when you get your returns.
Save for emergency situations
Cost of living is increasing with each passing day. Expenses are seemingly infinite while means are limited, so you never know when that rainy day could strike. It is, therefore, imperative that you have an emergency fund in place that you can turn to in times of need.
Most of us are comfortable with living paycheck to paycheck which is not the safest model to exercise. Follow the thumb rule of saving and stacking away your hard earned money for at least six months. Keep aside a portion of your salary for the ‘contingency fund’ and let it stay there.
Here's something you could do: set a limit for yourself, say, 1 lakh. As and when you reach that limit, convert that money into a fixed deposit and lock it with the bank for at least a year. The earlier you start, the better. It may seem like a lot of work, but eventually, you’ll know what a great step it was for your financial security.
Women have been conditioned to turn to male members of the family to manage their money. While it is absolutely okay to ask for suggestions and help, don’t outsource your responsibility entirely. Do your own taxes, manage your own money, and learn to stand on your own two feet. Try and be the role model that this world needs and pass on your knowledge to as many women as you can. That is the true essence of women empowerment.
(Edited by Varsha Roysam)