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Saturday, April 30, 2016

Determining Financial Goals For Women & Steps To Planning Their Finances..!


By on Saturday, April 30, 2016

Determining Financial Goals 

For Women & Steps 

To Planning Their Finances..!

From PersonalFN

Many women successfully handle the demands of a family, career, and household. In fact, they are the “Chief Financial Officers” of their household, however when it comes to managing their own finances, 
they take a back seat—due to the lack of awareness on personal finance.  

Financial independence is vital for everyone, including women. Dependence on state, parents, and partner should be avoided as much as possible.

Goals differ as names differ. However, in today’s article we are concentrating on 3 important financial goals that every woman should focus on and the vital steps to plan their finances:

Goal # 1 Financial Independence: 

There is possibility that a woman may be  self-reliant  at some point of time, due to divorce, becoming a widow, choosing to marry later in life or not at all.

Moreover, a woman is more likely to put her career on the back-burner to manage family responsibilities—leading to lower career earnings and decreased contributions to recognised provident funds. 

This makes it even more important to hone the skills to manage their own financial affairs.

Goal # 2 Become debt-free

Dave Ramsey, a US based financial coach says,  “The decision to get into debt alters the course and condition of your life. You no longer own it.

You are owned.”With the advent of plastic money, affordability isn’t the question. You like it, swipe a card is the solution to the gap between the object of your desire and money in your savings bank account

According to Dave,“responsible use of credit card does not exist.”  It is no rocket science to understand that it makes financial prudence to live within your means.

If you are already in the pink of your financial health, creating a budget, using additional sources of income, and renegotiating with creditors could be some steps that you should follow to repay your debt at the earliest.

Goal # 3 Pension:

Apart from handling responsibilities at home and work, they seldom ignore planning for their golden years. It is the number one priority for every individual. Studies show that women tend to live longer than men making it possible for them to save more for a longer retirement. 

So, it is important to start early and allocate a portion of your earnings to a diversified equity fund. With the passage of time and the magic of compounding, you’ll be able to build a sizeable retirement corpus.

Let’s move on to the steps that you need to follow to achieve your financial goals.

Step # 1 Create a Budget:

According to Dave Ramsey,“A budget is telling your money where to go, instead of wondering where it went.” Making a budget seems unromantic and mundane. But it stops you from going overboard. 

Housewives have mastered this skill. They are not the bread winners, but they know the monthly family expenses and work out an action plan around it.

If you haven’t prepared a monthly family budget, flip through all of your financial documents and get real with yourself about how you’re spending money, your current spending habits, and what you consider necessities.

Here’s an example to know your cash flow:

Cash Flow statement for the month of
Cash Inflows:
Rs

Salary


Bonus


Rental Income (if any)


Dividends


Other Income


Total Cash Inflow (a)

Cash Outflows:


Household


Lifestyle


Medical


Travel


Contribution to Parents


School Fees


Equated Monthly Instalments (EMIs)


Insurance Premiums


Total Cash Outflow (b)


Net Cash Flow (a-b)


Note: The above table is for illustration purpose only
(Source: PersonalFN Research)



Knowing how you spend, better equips you to set your long term financial goals and track your spending, which should culminate to help you achieve your financial goals.

Step # 2 Build an Emergency Fund..!

An emergency fund acts as a hedge against life’s uncertainties. Financial Planners suggest allocating 6 to 12 months of your expenses to an emergency fund. Make use of liquid funds or sweep-in-fixed deposits to invest your emergency funds.

Step # 3 Write down your financial goals..!

“A goal is a dream with a deadline.”—Napoleon Hill. When you write down your financial goals, you know exactly what you want to achieve and utilize your money wisely. Break down your financial goals based on the time frame to achieve them. 

The table will help you stay focused on what you really aim to achieve.

Your Personalised Goal Tracker
Short Term Goals
(under 3 years)
Estimated
Cost
Target
Date
Action
Steps
1)



2)



3)



4)



Short Term Goals
(under 3 years)
Estimated
Cost
Target
Date
Action
Steps
1)



2)



3)



4)



Short Term Goals
(under 3 years)
Estimated
Cost
Target
Date
Action
Steps
1)



2)



3)



4)



Note: The above table is for illustration purpose only
(Source: PersonalFN Research)


No matter what your age is, you need to get a grip on finances and become financially savvy. Professor Annamaria Lusardi, Director of the Rand Financial Literacy Center says,“One reason that women might be better financial decision makers, despite displaying, in general, lower literacy than men, is that women know what they do not know.”

Watch this space as we unravel topics on investments, insurance, retirement and estate planning for women, making it your own!




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