I once saw a bumper sticker which said “A man is not a financial plan!”
As a financial advisors we would totally agree! Most women in India rely on men to manage their monies because of the social structure which has been prevailing. Women have been bought up thinking that finance is a man’s domain and men understand financial matters better than women. Even successful career women have low financial literacy levels and apart from being too busy with work and home life, management of finances is not an interesting subject! Faced with contingencies (like death of spouse or divorce), women have been clueless on what to do and where to start on their finances.
Are you a single woman (widowed, divorced or never married)? If so, you’re financial planning needs are greater than the average couple or single man. This is because single women don’t have another income to fall back on.
So how do single women start managing their finances? Here are a few simple ways to begin
Womantra1-. DO IT YOURSELF. Do not give the management of your finances to anybody else .Spend some time learning about money management. Set specific goals and undergo a financial planning exercise to see how much you must save for your goals and also to check how well your current savings can get you to achieve your goals.
Womantra 2 - Create an emergency fund which has an amount equivalent to 6 months expenditure for any contingencies. This is specifically important for single women with children. It is imperative that single women plan properly for retirement as they may not have anybody to depend on financially.
Womantra 3 Choose the right mix of products. Invest into products like PPF, mutual funds which give good long term consistent returns. Many a time, people tend to buy toxic investment cum insurance products for tax planning. Invest into pure risk cover (term cover) policies for women with dependants. In case you don’t have a dependant, you can decide not to take insurance. It is also extremely important for single women to have good health cover. While choosing a health cover, study the exclusions carefully and ensure that all illness are covered in the policy from day one.
Womantra 4 - It is crucial to build a good savings habit and try to save 40% of your take home salary. An expense tracker will help you achieve this (Income – Expenses). Debt can hurt your future .Single women should take loans only if they need too and must try to pay off debt as soon as possible. Many a time, we have seen cases where relatives ask single women to take loans for them in the woman’s name only to realise later on that the asset is being held by the relative and the woman is left paying the EMIs for the loan. It’s your money and it is for you to decide what you want for your funds.
Womantra 5 -In case you have just got a divorce, you must change the holding pattern in your bank account and investments. You must also change your nominations in insurance policies and other financial instruments. Remember that Streedhan (assets given by parents and acquired during marriage) remain with the woman.
Womantra 6- In case you have been single and are getting married, ensure that you discuss the way forward on family finances and be involved in managing family finances from the start of the marriage.
Womantra 7- Single women must maintain all their financial documents properly and must be discrete about their nominees. It is vital that single women write a will if they want their assets to pass on as per their wishes.
As Carl Richards says: In the end financial decisions aren’t about getting rich. They are about getting what you want- getting happy.
Womantra Tip:
Take control of your financial life early cause if you don’t have a plan you will be part of someone else’s.
Mrin Agarwal & Rima H
Founders and Trainers Womantra