9 Women’s Guide to Financial Independence

Table of Contents

The modern Indian woman today is breaking age-old barriers and meeting new challenges, both personally and professionally. However, it is imperative women free themselves from financial overdependence on family and guard against dire situations like divorce, death etc.

Women are by nature, caretakers. We take care of our children, husbands, partners, grandchildren and parents. We take care of everyone, but ourselves. But, ladies we need to be proactive and make an investment in ourselves. The investment we make now will determine our quality of life both financially and personally in the years ahead.

1. Understand the term ‘Financial Independence’

For women to feel financially secure, they have to understand the term ‘Financial Independence’, which is about deciding what to do with their money. This applies to both working women and also housewives. This awareness can help women not just save money but also invest in various financial instruments.

Women are not just the stronger but also the superior half of our species. Being financially free generally means reaching a life stage where your financial assets are sufficient enough to allow you to not work just for earning money. But financial independence for women means something different. And a lot more than just having enough money in the future. It can be about having the independence to earn and manage their own money in the present itself. At times, it’s more about having economic independence in the present and not just the so-called financial independence in the future.

2. Acquire continuous Knowledge

If you want to excel at managing your finances, educate yourself. The field of finance is enormous, and for that, one needs to have strong decision-making abilities. To master the game, try to acquire thorough and continuous knowledge about it, for instance, reading articles, newspaper, conversing with seniors in the industry and having a mentor. The more you learn, the better you get.   

3. Prepare for Retirement

Women worldwide live 6 – 8 years longer than men on average, according to the World Health Organization. Since women often have less than men saved for retirement, this creates a situation where women frequently outlive their money.

Social security can sometimes fill the gap, but it’s not always enough. The National Women’s Law Center reports that, among people ages 65 and older, 11 percent of women live in poverty (compared to only 8 percent of) men. This scary statistic underscores the importance of financial education for women of all ages.

4. Build up your Emergency Fund

While saving for retirement is a no-brainer, you’ll also need to save for the many unknown and unplanned expenses that will inevitably arise.

Whether it’s a new roof, surprise dental bills, or a car that finally went kaput, you’ll need cash on-hand to save the day. An emergency fund can cover those surprise expenses and more, while helping you avoid going into debt.

5. Start an SIP

One of the things that every lady should work towards having is an Emergency Fund. It doesn’t have to be a huge amount. But having some buffer really helps in times of need. The money for emergencies can be gradually accumulated over time using simple RDs, FDs, or even debt funds. It may seem daunting at first when you begin. But gradually, it will swell into a sizable amount that can be your and your family’s financial cushion.

Apart from having a contingency buffer, for long-term investments, women need to look at equity mutual funds. These provide inflation-beating returns in the long run and one can easily invest a small regular amount via monthly SIPs (Systematic Investment Plan).

6. Budget Setting

Maintaining a budget is the first step of making a financial decision, keeping in mind the cost and expenses and the source of income. It will help you in having a clear sense of your expenses and income. Segregating the income earned into several heads of payments, and allotting it keeping in mind that there is some surplus amount left at the end. Try to make daily, weekly, monthly or annual budgets. 

7. Take a risk and learn from mistakes

“Set goals, crush goals, repeat.” Women are usually very cautious when it comes to making an expense. But the real deal is in loving your dreams and taking risks. Irrefutably, a person needs to leap a faith and take a risk like investing in an asset or making some changes in the budget. Moreover, it is good to learn from the mistakes we make. There may be times when our expenses exceed our income, and we use up our previous savings. So, this will require us to cut down our cost of consumption like impulse buying or eating out, fancy shopping etc.

8. Know about ‘DIP’

It is important for any investor to understand the concept of DIP- Delayed Gratification, Impact of Inflation and Power of Compounding. Investment advisors point out that one should continue reinvesting earnings received on investments. This will accumulate wealth and if you commit to this saving regime, the more successful you can become in growing wealth.

Also, investors need to delay gratification. If a fund provides them over 20% return, instead of redeeming the amount, investors need to resist the temptation and should let the fund grow till the goal is achieved. Always think of your long-term wealth accumulation and get rid of impulsive spending. Also, calculate the impact of inflation while investing. Women should invest in equities, mutual funds that can beat inflation and help them in retaining or boosting their living standards in future.

9. Proper Paperwork

There have been several instances where an investor is unable to claim returns from a bona fide investment simply because of misplaced or wrongly-filled documents. Proper documentation is a must to safeguard your investments. Also, ensure that someone other than yourself is fully aware of all your investments.