Navigating through your personal finances isn’t guaranteed to be easy. However, planning well ahead can make a world of difference and help you build a strong financial foundation.
Gone are those days when women were expected to stay at home to look after the household. Things have changed considerably since and today, men and women are financially and socially at par. So, when it comes to finances, why should women be far behind?
The sad truth, however, is that when it comes to investments or personal finance, most women still rely on their partners. First things first, now that you’re in your 30s, if you don’t have one already, you absolutely have to start with a financial plan. Wondering why?
Well, identifying and setting a financial goal is sure to go a long way in helping you achieve milestones in life, whether it is your children’s education or a foreign trip with your family. Needless to say, financial planning will fetch a lot of clarity.
Life is unpredictable and there could arise many a situation such as a sudden layoff from work, an unprecedented loss in business, a medical emergency, etc. You need to be prepared to handle such situations without letting them impact your fixed expenses. The following points will help you remain financially secure throughout your life. Read on!
#1 How important is saving for your retirement?
Your retirement rests squarely on your own shoulders. The key to saving for retirement successfully is to automate your savings. This way, you don’t have to worry about forgetting to save or spending your entire paycheck and leaving yourself with no money for your savings fund.
It doesn’t matter if you’re only able to save a meagre sum each month. Even saving a small sum is a great way to begin as the money will build up and accumulate over time, till you’ve got a sizeable sum for disposal after retirement. The more time your money gets to grow, the better off you’ll be post retirement.
#2 Should you proceed with a separate account or merge accounts with your partner?
Whether you should have a separate account or park your cash in a joint account with your partner, the decision is entirely yours. Whatever you decide with your partner, there are good reasons to consider a combination of both joint and individual accounts.
A joint account can be the best option for handling shared expenses such as mortgage or rent and utilities, and groceries. It’s also advisable to have an individual discretionary account for personal expenses. This arrangement is the best for those who don’t wish to compromise their financial freedom.
#3 Having an emergency fund: Yay or Nay?
In times of medical or a financial emergency, you’ll thank yourself and be relieved if you’ve set aside a sum of money to carry you through difficult times when you’re hard-pressed for cash. Just like with retirement savings, a good way to set up an emergency fund is to turn it into an automated process.
You get to decide how big your emergency fund should be. Generally, it’s good to have at least 6 to 12 month’s worth of expenses saved up in a way that you can access easily. Choosing an investment with a lock-in period will mean that you can’t access it in the moment of crisis. So, avoid that.
#4 Be a boss when it comes to saving and investing early
Making investments is crucial, but you’re already aware of that. The challenge lies in being diligent and consistent with it. In addition, it is also very critical to choose the correct investment vehicle.
Factors such as your investment goals, the time you can allow your investments to grow, and your risk appetite should go into determining the investment tool that’s well-suited for you. Comprehending the importance of starting early when it comes to saving and investing is the first step to putting your hard-earned money to work.
Beginning as an investor in your 30s means you’ll allow your money to grow over a longer period of time, thereby multiplying your money through the power of compounding.
When it comes to investments, making smart choices is key. Your investment portfolio must not only combat inflation but also generate enough value to help you retire as early as possible.
#5 Getting yourself and your family insured
A Life Insurance policy acts as a financial safety net for your family. In addition to ensuring financial security and providing peace of mind, it comes with tax-saving benefits.
You can never be sure of what the future holds in store or you. Therefore, remember to take insurance responsibly and consider the need to secure the future of your family members.
Being a woman of the 21st century, it’s essential that you take charge of your finances and secure yourself with Health Insurance. In addition, as a thumb rule, stash an amount that is enough to sustain you for a good six months. You can even park your money in a Fixed Deposit to help you earn a decent and stable return.
When it comes to financial planning, women are great! Haven’t you even seen your mother plan the household budget down to the T? Women are genuinely great at planning and budgeting to make the most of the available resources. Even though your finances may not be in order now, with these pointers, there’s no doubt that you’ll be off to a good start and on your way to attain financial nirvana.
And, lastly, here’s a golden rule that you just can’t afford to ignore. A major part of taking charge of your finances completely is determined by your credit health. Maintaining a strong personal credit history serves as security and boosts your credit worthiness in the eyes of the lender.
This article was originally published on bankbazaar.com and re-published with permission.