Gone are those men-centric days when a male authority was anticipated to be sole the breadwinner of a family, and the females in the house were projected to stay at home and take care of the family. Today, both women and men are offered similar opportunities on economic and social level. Indeed, the demographics of women have swiftly transformed in the last few decades. Today’s women are a significant and noteworthy part of the global and corporate business landscape. More and more women are encouraged to take charge of their finances and business while looking after their household. In a sense, more and more women are becoming financially independent – they do not have to depend on any male figures in their lives.
This article aims to provide 4 financial planning tips for women to attain financial freedom.
Tips on financial planning for women
Following are a few money tips that can help women to become financially independent:
- Assign a budget
According to your income, come up with a customised budget taking into account your risk profile, financial goals, and the desired investment horizon. An excellent way to begin is by adopting the 50-30-20 rule. According to this rule, you must allocate around 50% of your monthly income to basic necessities, 30% of your salary should be used to invest in different types of investments, and the rest 20% can be used to live your life queen-size.
- Take charge of your fixed expenses
Your fixed overheads are not likely to change in the near future. Fixed overheads include expenses such as your EMI (Equated Monthly Instalment) or rent, insurance, utility bills, etc. Rank these expenses based on their urgency and noteworthiness and set a limit in stone.
- Plan your tax outgo
Nobody likes paying the extra outflux of cash from their pockets, even if it is to pay taxes. Rather than leaving your entire finances to your Charted Accountant, it is wise to take matters in your hands to an extent and be proactive while paying your taxes. Don’t forget to fully utilise the tax deduction of up to Rs 1.5 lac under Section 80C of the IT Act, 1961. There are various other deductions and exemptions under Section 80 that can be used to significantly lower your tax outgo.
- Retire like a queen!
As compared to men, women are often a victim to shorter working tenures, with extended life expectancies. To make matters worse, women are not always paid equally for the same amount of work as their male colleagues. This is commonly referred to as gender pay gap. Do a back-calculation to evaluate how big financial corpus would be required post your retirement considering your current lifestyle. Do not forget to factor in inflation. Your investment options should ensure that you achieve this figure over time.
Realise the importance of investing and start your investment journey in mutual funds today so that you can become truly independent. Happy investing!