10 Powerful Ways for Women to Grow Their Wealth and Achieve Financial Freedom

The journey towards financial freedom is not merely about accumulating wealth; it's about empowerment, autonomy, and the ability to effect positive change. In this article, we explore 10 powerful ways for women to grow their wealth and achieve financial independence.

Before delving into the strategies to cultivate your wealth and achieve financial freedom, let's first get a clear idea of the term "Financial Freedom".

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I asked my sister what financial freedom means to her, and she said, "For me, financial freedom is buying things without worrying about my credit card bill at the end of the month". This got me curious about what other members of my family and friends think about financial freedom. My sister-in-law shared that it means having enough money to retire early, while my close friend said it is about being able to make her own financial decisions.

It became clear to me that financial freedom is subjective, and everyone has their own idea of what it is. While their views are somewhat true, I believe there's more to it than just those aspects.

You see, financial freedom isn't a destination; it's a thrilling journey of financial empowerment and self-discovery. It means navigating the world of saving and investing with a steadfast long-term strategy while staying fiercely committed to your goals.

In its simplest form, achieving financial independence instils in women a sense of security and dignity, regardless of their socio-economic status. This ripple effect extends beyond individual women, shaping families, communities, and even entire nations.

A greater number of financially independent women correlates with a more progressive society, characterised by improved health, safety, and reduced bias. These women serve as sources of inspiration and role models for their children, actively challenging gender stereotypes embedded in our culture. Moreover, financial independence enables women to retire early and savour the fruits of their hard work.

And here's the exciting twist: it's never too late to embark on this journey and seize control of your financial destiny.

In a world traditionally dominated by men, women are rising to prominence in the financial sector, wielding their expertise and reshaping the landscape of wealth management worldwide. Thanks to advancements in education for girls, a cultural shift, and a newfound commitment to diversity and inclusion, women are breaking barriers and defying stereotypes at every turn.

Indeed, it's long been recognised that women excel at money management, a fact underscored by the surge of female entrepreneurs who are dispelling outdated myths about women and financial planning.

Yet, despite this advancements, there remain lingering misconceptions that limit women's financial ambitions, limiting them to personal and household budgets. Many women face daunting barriers on their path to financial freedom, from towering debt burdens to neglecting their own well-being and shying away from investments and retirement planning. Therefore, it's high time for a fundamental shift, empowering women with the knowledge and resources to navigate the complexities of finance with confidence and finesse.

Here Are 10 Powerful Ways for Women to Grow Their Wealth and Achieve Financial Freedom:

1. Open Your Own Savings Bank account:

For many women, a Savings Account serves as their initial introduction to the financial system. Typically, homemakers opt for joint accounts with their spouses. However, to attain financial independence, it's imperative to hold your own Savings Account and manage it independently.

If you're a working woman, chances are you already have a Savings Bank Account. Yet, many working women merely use these accounts for salary withdrawals or everyday transactions. While a Savings Account may seem like a basic tool for cash deposits and withdrawals, it holds numerous opportunities to glean valuable financial insights.

Through regular account activity, you can learn about interest accrual on deposits, calculating average monthly balances, and various associated fees. Additionally, you can learn to operate lockers independently and explore avenues such as Recurring Deposits or Fixed Deposits to initiate your investment journey.

Cultivating a savings habit through your Savings Account not only instils financial discipline but also unlocks access to government-backed investment and loan schemes, thereby paving the way toward broader financial opportunities.

2. Involve Yourself in Family Finances:

The more engaged you are in overseeing and understanding your family's finances, the more beneficial it becomes. In today's digital age, monitoring your bank statements has become significantly simpler with internet banking and e-statements.

It's recommended to regularly review all your financial accounts, including bank accounts, credit cards, e-wallets, etc., at least on a monthly basis. This practice offers a clear insight into your spending patterns and facilitates better financial management. Leveraging budgeting and expense-tracking apps can further help in categorising and monitoring your expenditures.

Many homemakers may lack awareness regarding their family's income, fixed expenses, outstanding loans, interest rates, investments, and other financial aspects. In the event of unforeseen circumstances placing the family's financial responsibility on their shoulders, managing finances without prior knowledge or experience can pose significant challenges. Therefore, regardless of your employment status, it's crucial to be well-informed about your family's finances.

3. Educate Yourself:

A significant challenge for women in achieving financial freedom stems from a lack of financial literacy, often resulting in dependence on men for making financial decisions. This reliance has contributed to women's diminished confidence in managing their finances. It's important for women to prioritise self-empowerment through financial education to bridge this gap and move closer to financial independence.

Balancing household and professional responsibilities leaves many women with limited time to dedicate to financial literacy. Thankfully, in today's fintech-driven world, there are numerous avenues available to enhance financial knowledge. Investing in e-learning courses on personal finance can offer valuable insights into money management skills and the intricacies of financial planning, empowering women to become their own financial planners while allowing flexibility and convenience.

4. Break the Glass Ceiling & Plan Your Goals:

Many women unintentionally limit their financial potential by neglecting to plan for their financial future, creating a personal glass ceiling. It's essential to break through this barrier by proactively mapping out your goals and aspirations. Just as you prioritise caring for your loved ones, including your spouse, parents, and children, it's equally crucial to prioritise your own financial well-being.

Today, many women no longer rely solely on their partners for financial support, underscoring the importance of managing their present while also planning for the future with foresight and confidence.

Goal setting forms the cornerstone of effective financial planning, providing a clear direction and roadmap for success. Therefore, you should take charge of your financial goals by setting S.M.A.R.T. goals tailored to your aspirations, whether it's saving for a dream wedding, purchasing a home or car, embarking on an international adventure, or securing your children's education.

Ensure your goals are Specific, Measurable, Achievable, Realistic, and Time-bound, with defined timeframes (such as 3, 5, or 10 years) and associated financial targets. This strategic approach empowers you to kickstart your journey toward financial independence with clarity and purpose.

5. Maintain a Good Debt-to-Income Ratio:

While debt can facilitate important purchases like a car or a dream home, it's crucial to ensure that your debt-to-income ratio remains below 30% to 40% and that you have the means to repay the loan promptly. Moreover, the debt should not become burdensome.

If you find yourself already juggling multiple loans with a high debt-to-income ratio, it's vital to prioritise paying off high-cost loans. These loans can significantly drain your finances, with a substantial portion of your monthly payments going towards interest rather than reducing the principal repayment, resulting in long-term financial strain. Swiftly paying off these loans is essential for achieving financial freedom.

However, before opting for foreclosure or part-payment, it's advisable to assess pre-closure charges and calculate potential savings after deducting these charges. Prioritising debt reduction and maintaining a good debt-to-income ratio is key to mitigating the risk of debt-related stress.

6. Improve Your Credit Score:

Having debt isn't necessarily a negative aspect of financial management. In fact, establishing credit is just as crucial as any other financial decision. Lenders often hesitate to approve loans for individuals lacking a credit history. Conversely, maintaining a favourable debt-to-income ratio and a commendable repayment track record helps in building your credit history and improving your credit score. This, in turn, enhances your eligibility for future loans at competitive interest rates.

When seeking to build a credit score, it's essential to exercise caution. Opting for low-cost loans is advisable, while high-cost short-term loans like Payday Loans, App-based Loans, and Personal Loans should be avoided whenever possible.

Here are 8 guaranteed ways to improve your credit score.

7. Buy Adequate Insurance Coverage:

Despite the growing awareness of life and health insurance in India, women lag in securing adequate coverage for themselves. Many women, along with their spouses, may not fully understand the significance of obtaining insurance tailored to their needs.

For working women, the potential loss of income could significantly impact their family's standard of living. Even homemakers, who tirelessly devote over 12 hours a day to household responsibilities without breaks or holidays, may not realise the importance of insurance coverage. Although their contributions often go unnoticed, the absence of a homemaker could leave the family emotionally and financially strained.

Additionally, women are inherently more susceptible to critical illnesses, including immune disorders, irregular blood pressure, diabetes, arthritis, breast cancer, bone-related disorders, and more. The physical toll of childbirth often makes women vulnerable to health issues, particularly after the age of 40. Regardless of whether one is a student, working professional, or homemaker, and irrespective of age, the unforeseen occurrence of a medical emergency can affect anyone at any point in time.

Therefore, buying life and health insurance coverage is crucial for women, providing financial protection for themselves and their families while offering a sense of peace and security.

Here's why life insurance is important for homemakers.

8. Maintain a Contingency Fund:

Uncertainty is the only constant thing in life. Therefore, maintaining a contingency fund is a pathway to financial independence. You may have observed your mother or grandmother discreetly setting aside funds from household savings for unexpected circumstances.

These contingency funds prove invaluable during challenging times, such as medical crises, insufficient funds for a home loan down payment, or covering tuition fees for a child. Ideally, one should aim to accumulate a contingency fund equivalent to at least 12 months of living expenses, including loan EMIs and insurance premiums, to ensure financial resilience in case of uncertainty.

9. Create a Diversified Robust Investment Portfolio:

Many women often avoid investment decisions, entrusting the task to male family members such as fathers, husbands, or brothers. However, it is crucial to take charge of your financial decisions and actively participate in planning investments.

Creating a robust investment portfolio is essential for long-term wealth accumulation. Begin by diversifying your investments across various financial instruments to mitigate risks and optimise returns.

Building wealth is a gradual process, so it's important not to be swayed by the allure of complex structured products. Instead, start small and commit to investing diligently through SIPs (Systematic Investment Plans), avoiding impulsive decisions.

With SIPs, you have the flexibility to invest daily, monthly, or quarterly in a mutual fund scheme of your choice, with investment amounts as low as Rs 500 per month.

SIPs are budget-friendly, eliminate the need to time the market for wealth generation, cultivate the habit of regular investing, and serve as an effective tool for accomplishing significant financial goals. By adhering to the right discipline and consistently maintaining SIP instalments, you can work towards achieving your financial aspirations.

By creating and maintaining a diversified investment portfolio, you'll gain insight into its performance across market cycles, enabling adjustments as needed. Regularly reviewing your portfolio is crucial to safeguard against potential losses in the future.

10. Plan for Your Retirement:

For women, the issue of longevity presents a stark reality in the realm of financial planning. According to the World Health Organization (WHO), women typically outlive men by 6 to 8 years. Consequently, the complexities of long-term financial management pose greater challenges for women, as they require a more substantial cash reserve than men to ensure financial stability in their later stages of life.

Therefore, it is crucial for everyone, particularly women, to start retirement planning early in life to enjoy stress-free and leisurely golden years. Building a retirement corpus is a long-term financial objective spanning several decades.

Utilising tools like a retirement calculator simplifies the planning process. Once the retirement corpus is calculated, strategically investing in reputable mutual funds can help achieve targeted retirement goals.

To conclude:

Achieving financial freedom is not merely a destination but a journey paved with mindful decisions and disciplined actions. Women play a pivotal role in shaping the economic landscape, yet many face unique challenges in attaining financial independence. By embracing financial literacy, taking control of investment decisions, prioritising savings, and planning for long-term goals, women can chart a course towards greater financial resilience and empowerment.

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KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

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This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.