How Women Can Ensure their Financial Independence

Proper financial planning helps you cope with unforeseen situations, like the pandemic-induced uncertainties have proved. In view of this, it is important for every woman to become financially independent and make smart money choices.

Financial independence simply means being able to make financial choices that will help you live the way you want. Being financially independent gives you the power to achieve your envisioned financial goals and acts as a strong buffer against emergencies.

Women are well capable of taking their own financial planning decisions and don't have to depend on anybody. Every woman whether married, single, widowed, or divorced should strive to achieve financial independence.

Image source: lookstudio - www.freepik.com

Why it is important for every woman to attain financial independence?

• If the breadwinner of the family faces job loss, pay cut, disability due to illness/accident, etc., it can impact family income. Financial independence can help you to sail through those difficult times and fulfil the needs of your family.

• Cost of living has risen over the years and the escalation will continue in the future. It can help if women can contribute not just towards household expenses but also in fulfilling family goals.

• Financial independence enables you take various decisions in life confidently. You will have the freedom to pursue your dreams and ambitions without having to depend on anyone.

How to ensure your financial independence?

Having a regular source of income is a good first step to attain financial independence; but prudent financial management is equally important. Ensure that you always save a portion of income as savings. Follow these wise words of Warren Buffet, "Do not save what is left after spending; instead spend what is left after saving".

Once the habit of saving grows on you, prepare an investment strategy to meet your various short-term, medium-term, and long-term financial goals (including retirement). Select and invest in suitable instruments such as bank deposits, small saving schemes, equity mutual fund, debt mutual funds, etc., after you have assessed your risk profile and investment horizon.

Ensure that you align your investment to each of these financial goals. This will help to stay clear from borrowing and the debt trap. Avoid taking loans unless absolutely necessary.

To remain on track with your financial goals, review the financial plan at least annually. This will enable incorporating any economic or personal changes in the financial plan to achieve the envisioned financial goals as intended.

Along with investments, it is important that you maintain an emergency fund at all times to cope with unexpected situations. Ideally, you must have at least 6-12 month worth's expenses reserved as an emergency fund. The amount saved for emergency situations should be parked in liquid avenues such as bank deposits and/or short duration debt mutual funds.

Another important aspect of financial independence is to secure your health. The cost of quality health services is on the rising exponentially. Purchasing a comprehensive health insurance cover will take care of some aspects of the financial burden of any medical emergency and reduce the stress and financial worry that comes with it.

Women often feel the financial pinch if they are divorced or widowed, or are cheated out of their rightful legacies, or/and are rabidly mis-sold financial instruments.

It is critical to have your own separate bank account that only you can operate. Manage and monitor your income, investments, and assets on your own to have a sense of financial security. Do not rush to merge your finances with that of your spouse when you get married.

Even if you do not have your own source of income, be involved in the financial decisions of the household. Know all about the family's income from various sources such as salary, business, investment, rent, etc. Additionally, be up-to-date with premium payments for the life and health insurance cover that the family has. It is also important to know where various important documents are kept so that you have easy access to it whenever a need arises.

A lot of times, the lack of awareness about personal finance creates financial insecurity. But conquer the negative feeling by taking time to learn the basics of saving, budgeting, and investing so that you make informed decisions. Before investing, conduct your own research and do not imitate you family, friend, neighbour, or colleague's decision. Do not sign any investment or any other document/form without carefully going through its features, benefits, risks, and other terms and conditions.

If you can't devote time for comprehensive research or lack the necessary skills, seek the guidance of a qualified, ethical, and unbiased financial planner.

Financial independence can help you lead a life of dignity and self-sufficiency. If this is your first step towards financial planning, the best time to begin your journey towards financial independence is always now.

Happy Investing!

Warm Regards,
Divya Grover
Research Analyst

PS: PersonalFN understands that not everyone holds the adequacy of financial knowledge. Here we encourage you to gain and enhance your financial knowledge and become a 'Financial Guardian'. You will understand the financial planning elements to become your own financial planner and guide your family through these challenging times.

And in case you are wondering how to become that financial guardian for your family, PersonalFN's latest special initiative, the "Certified Family Guardian" offers you an exclusive opportunity to learn the finer nuances of money management.

Organised into eight modules with 24 extensive videos, the "Certified Family Guardian" will help you with all the relevant tools and learning modules needed to get better at money management. It also offers a host of other benefits to help you make informed investment decisions. Read here for complete details.

So, if you wish to improve your financial knowledge and even select worthy mutual fund schemes, enrol to "Certified Family Guardian" course today!

Join Now: PersonalFN is now on Telegram. Join FREE Today to get ‘Daily Wealth Letter’ and Exclusive Updates on Mutual Funds