Modern women are so busy in juggling household chores, family responsibilities and their careers that they often forget to think about themselves and their future. While family and career are important but so is taking care of yourself, thinking about your retirement and planning for your financial security. Considering inflation and other future uncertainties, neglecting your financial interests now may hurt you in future.
Women who in every sense want to be financially independent must start making right moves now before they’re left with nothing but regrets. It takes a lot of efforts and well-thought decisions to achieve financial security; however, a few mistakes can ruin all your hard work and take you back to square one. In this post, we have compiled five financial mistakes that women must always avoid to lose less and save more for future.
- Leaving financial decisions on your partner
Many women in India despite earning money are not financially independent. This is because they leave financial decisions entirely on their spouses. As a result; they get no experience in handling their finances or investments. Some women even give their entire salaries to their partners to manage. It is good that you trust your partner but giving your income entirely to your partner leaves you with nothing in the end. If this is not enough, women are not even actively involved in monitoring or handling financial assets of their family. They know nothing about their family assets, or investments.
To go beyond managing household budget, women must start taking charge of their personal finance first. They must handle their income on their own. They must take interest in their family’s financial decisions. To understand finances better, you can discuss it with your partner or consult financial experts. Tell your partner to involve you in every financial decision. Don’t become guarantors or co-borrowers to loans or a joint signatory to investments blindly. Understand the rights and liabilities before signing a dotted line.
- Compromising professional aspirations
While there is no harm in taking a short break for yourself, to take care of your new born child or to attend to someone sick in the family. However, such breaks should not lead to the ending of your career aspirations. More often than not, women are expected to quit their jobs for the sake of their family and children, which not only causes a dent on their confidence but also on their financial independence and future security.
The reasons for quitting your job may be unavoidable but it is still advisable to women to not give up their jobs easily. Try to find a solution where you can continue with your family commitments while continuing your job. Always remember, your job empowers you financially to deal with a monetary loss, death or divorce. If you can’t go to office every day, you may consider working-from-home or opting for a freelance work.
- Avoiding decisions on investments
Women are different from men in plenty of ways including the way they approach money. Blame it on genes or social upbringing but women are more afraid to take risks than men. Even when it comes to making investments, men choose to invest in stocks and other unpredictable investment options whereas women put their money in safe avenues such as fixed deposit and PPF (Public Provident Fund). There is no problem in investing money in safe avenues such as fixed deposits or PPF as they are easy to understand and manage. But while trying to be safe women lose opportunities to get higher returns.
If women want their money to grow, they must invest in equity-linked investment options such as stocks or mutual funds instead of fixed deposit or PPF as the former is known to give better returns than latter. Women are considered to be patient investors therefore; long-term investment strategies will better suit them.
- Not preparing for emergencies
Since future is unpredictable, we should always be prepared even for worst situations. To ensure that unforeseen events do not negatively affect the overall financial wellbeing, women must get insurance policies. Get adequate cover for yourself and your family. Teach yourself more about insurance policies and choose the one that benefits you the most. Besides, life insurance and health insurance, women must also consider insuring belongings such as cars under the car insurance.
In addition to insurance cover, you will also need cash to tackle unfortunate situations. To ensure adequate cash is available at the time of emergency, women must create an emergency fund. Every month, they must take a portion out from their salaries and add it in the emergency fund. There is no limit to how much money should be collected in this fund – the more the better. However, the fund should have value that covers at least six months of your monthly expenses.
- Delaying plans for retirement
Delaying planning for retirement, irrespective of gender, can prove to be a big financial mistake. Many men start thinking about retirement after the age of 40 and for women ‘retirement planning’ is not even on their priority list. A ‘mother’ or a ‘wife’ in you might want to spend all your money for the betterment and security of your family but you also need to think about your security and how you’re going to spend your life in your senior years. Women must start investing for their retirement as soon as they start earning. Doing so will give their retirement investments more time to grow and compound.
By investing early for your retirement, you will not have to depend on your children or relatives for every expense. Having money of your own in old age will give you the freedom to use it wherever you like. You can spend it to go on a world tour, pursue your hobbies, help your children in need or buy gifts for your children and grandchildren. Most importantly, with an effective retirement plan, no matter what lies in the future, you will be financially prepared for the worst financial condition.