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The Maiden money manager

It's not your salary that makes you rich, it's your spending habits.

  • New Delhi,  March 23, 2016  
  • |  

It's not your salary that makes you rich, it's your spending habits. So, stop splurging, take note of the following tips, and take control of your life.

The itch to shop and splurge is known to overwhelm even those who are in 'control' of their lives. But it is supposed to be more true of women than men. When it comes to investments, however, women best prefer to leave it to their fathers or husbands - a decision that they are often found to regret later.

Despite that, according to statistics, only about 30 per cent of Indian women take money decisions. This, therefore, raises a question. Indian women are traditionally good managers, competently fulfilling their responsibilities both at work and home.

But are they doubtful money managers? Well, the answer, perhaps, lies in their love for spending, because taking charge of one's financial life is not about how much one earns, but how well one saves, besides being a patient and informed investor at every stage of one's life.

So, the first step for a woman of any age is to rein in her desire to splurge and, instead, get the priorities right - from her child's education and wedding to her own health and post-retirement life. "It's important for women to take more interest in money. They earn well, but don't manage their hard-earned money well. Women should also take the trouble to educate themselves on finances in their best interest," says Suresh Sadagopan, Founder, Ladder7 Financial Advisories.

And, the earlier you start planning for both your short- and long-term goals, the better the results will be. Moreover, you could even seek expert advice to chart your journey towards financial security. "There are qualities, traits and circumstances that are unique to women, but like in all matters even when it comes to money, women need that extra bit of communication, sensitivity and maturity in her advisor," says Lovaii Navlakhi, a certified financial planner.

Whether you are single, married, or separated with dependant children, every individual will have her own requirements and priorities. Therefore, it is very important to align your goals and investments before choosing the investment vehicle(s) - equity, mutual funds, gold, insurance and property. But above all, be an early-bird and disciplined investor with loads of patience.

Working and Single with no dependants

Experts have always advised that to save enough one should start early and at the right age. So, early- or mid-20s is a great time to start saving. If you are already working, it is an added advantage. But before you start, be informed and and have a financial plan in place.

  • As soon as you finsih your studies and start earning your first salary, start investing a small amount every month to begin with. Of course, you have got to take care of your own expenses, but it is always better to set aside around 60 per cent of your salary before you start planning your expenses.
  • Also, zero in on your short- and long-term financial goals.
  • With no liabilities and being single, you can take risks.
  • Start with investments in fixed deposits, recurring deposits and liquid funds to build a corpus for your various goals and requirements.
  • Between 25 years and 30 years, you should buy a health insurance policy and a life insurance policy.
  • You can also start investing in mutual funds through systematic investment plan (SIP) route every month for the long term.
  • Plan and save money to buy a property at this age.
  • Review your portfolio every year with the advice of a good financial planner.

Single with dependants

If you have your parents as dependants as you start working, then you should be prudent before charting your financial plan.

  • Saving early is the mantra for a better future for both your parents as well as for yourself.
  • Invest through SIPs. Be informed about asset allocation strategies before you start investing.
  • Take the help of a good financial advisor before investing in any asset class.
  • Start investing in Public Provident Fund (PPF) and equity mutual funds via SIP for the long term.
  • Plan your long-term goals such as retirement, home, wedding, and your own higher studies.
  • Keep inflation in mind always and then invest.
  • Buy a property as an investment, so that you can put half of the house in rent and can earn.
  • Buy health/life insurance policies for your parents and for yourself.
  • Plan for your parents' retirement and yours, too. Buy National Pension System (NPS), annuity plans, and post office saving schemes.
  • Keep liquidity high. Women should have sufficient life, medical, home and accident insurance.

Married with dependants:

If you are married and working, it means you have lots of responsibility. You have to manage everything one step at a time.

  • You must first jot down your financial goals and your liabilities.
  • Take financial advice and then try to diversify your portfolio.
  • Plan for the future - your children's education, wedding and their higher studies.
  • Do not forget to increase your savings in equity-oriented assets whenever your salary increases.
  • Gold is something that attracts every woman, but as an asset class it is very volatile. So, invest only 10 per cent of your portfolio in gold. Do not confuse gold jewellery with investments.
  • Review your portfolio every year with the help of a good financial planner and rebalance your portfolio if needed.
  • Buy a health cover and life insurance policy for your family and for yourself.
  • Make a budget of your expenses every month and then start planning for your investments.
  • Invest in a good child plan to secure your children's future.
  • Invest in mutual funds through the SIP route and increase the amount with an increase in your salary.
  • Keep some money aside as a contingency fund.
  • Try to sort out your EMIs as early as possible.
  • Keep some money parked in liquid or short-term funds. Invest for the long term in equity MFs and PPF.
  • Save money for your retirement.
  • Always diversify your portfolio to get good returns and invest the proceeds from those investments in some other good schemes.

 Married with no kids and dependants:

If you are married and working, but do not have dependants, you are at an advantage because you can save some money before you decide to plan for a child. To take care of children is not an easy task.

  • Decide your financial goals with your husband and zero in on your priorities.
  • Make a financial sheet of your expenses and investments.
  • Share your investment goals with your husband.
  • Open a joint account to save for your other expenses.
  • If you decide to buy a house, it is always better to take a joint home loan to get tax benefits.
  • Invest in mutual funds via SIP. Do remember to increase the amount of your SIP with an increase in your salaries.
  • Buy a retirement policy.
  • Diversify your portfolio and invest in different asset classes.
  • Start investing more in debt instruments, such as debt MFs and tax-free bonds.
  • Invest in equity through SIPs and lump sum, but try to reduce the exposure slowly as you close in on your retirement.
  • Don't invest too much in gold. • Invest in FDs, RDs, PPF, PO saving schemes and balanced funds.
  • Don't buy more than 2-3 MF schemes. Take the help of a financial planner.
  • Keep investing in contingency funds regularly for emergencies.

Single mom, Separated Or Divorced:

Being a single mom is not easy, especially if you are working and there is nobody to take the responsibility of you or your children. Therefore, follow some basic rules of investment.

  • First plan your liabilities.
  • Make a budget of your expenses.
  • Put your money in FDs, RDs, PPF.
  • Invest in MFs. SIP is the best way to save money regularly.
  • Buy health and life insurance policies for your children and yourself.
  • Start planning for your retirement as early as possible.
  • Invest for your child's future in good educational schemes.
  •  Invest for your children's wedding and higher studies.
  • As you are a single mom and it is very important to have a shelter of your own and for your child, plan to buy a house.
  • After a certain age, you can put a part of your house on rent and can earn some extra money.
  • Pay all your EMIs on time.
  • Educate yourself on the principles of home mortgages, taxes and retirement plans.
  • Invest in debt MFs, tax-free bonds.
  • If you are in debt after divorce, then try to deal with it strategically.
  • Take annuity plans, NPS, post office saving schemes, and Unit-linked Insurance Plans (ULIPs) for your retirement.
  • Cut down on your monthly expenses and stop splurging.
  • Do not neglect legal issues and save some money for emergencies.
  • Build an independent credit rating.
  • Follow the power of compounding.

It is prudent to know that if you do not take care of your money, then money will never be by your side. So, wherever you are in your life, start planning for a secure future.

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