Plenty has been written and said about financial independence, particularly in relation to women. But, exactly, what does financial independence imply for women? Well, it is subjective, and every woman may interpret it differently. It could entail being able to make her own financial decisions or being financially self-sufficient. It could imply being able to spend money whenever she wants or being able to survive in an emergency.
Financial freedom, regardless of socioeconomic status, makes women feel financially secure . Since women’s financial empowerment is so important, it’s worth understanding how they can help themselves. Here are some steps that women can embrace to achieve true financial independence:
Save and invest
Women have always had a flair for stashing some of their money and surprising everyone with entirely unexpected support at times of hardships. Since they didn’t know any better, in earlier centuries some women stored their savings under the mattress while others kept them in a savings bank account at best. Unfortunately, both alternatives ensured that the value of these funds was reduced by inflation. It is important to note that simply keeping money in bank accounts rarely earns enough to keep up with inflation. As a result, investment is critical in order to earn enough to meet rising prices yet leave some money on the table.
So women, regardless of their financial earning capacity or educational background, should be cautious investors. Whatever one’s financial strength is, a portion of one’s earnings should be carefully invested in the appropriate asset classes, that too in a disciplined manner over time, to build a large corpus for goals such as building a retirement fund, buying a house or a car, and for other long-term goals.
Ensure a personal health insurance plan
Health insurance makes for a great investment. From a financial standpoint, buying health insurance reduces tax liability, and the premium paid qualifies for a tax deduction. But medical expenses have a surprise element — they come unannounced and can be catastrophic that can significantly impact net worth. So, having insurance to pay for unforeseen or high-impact medical expenses is an investment women need to put on high priority.
While some may have a health insurance policy from their employer, the coverage may not necessarily be sufficient. People believe that they do not need to spend on an additional or a personal health plan. But, if there is a change in job or retirement, this thought process could impact financial goals. Hence, women should look into buying their own personal health insurance plan to access lifetime quality healthcare, to secure long-term financial goals and to live a healthier life.
Seek financial advice
Financial planning is one of the significant aspects of our future planning. Thus it’s always a good idea to seek sound guidance from time to time. Women can employ a professional financial adviser who can answer all of their money-related queries and lead them through the process of creating a comprehensive finance portfolio. They simply need to be wary of free advice from anyone who may not take their goal into account in the first place. It is helpful to always keep in mind that a professional planner will focus on an individual's unique goals and risk behavior in order to create an objective-based financial plan, and will also assist one in staying focused in order to meet the goals on time. Financial independence includes the ability to make sound judgments in times of need and uncertainty, and not just having money in one's individual/joint accounts or investments. Once financial independence is achieved, it will ensure a secure and meaningful life.
Women can do it all, goes the old age adage that still holds true. Women have traditionally been excellent at budgeting. They've already established a strong foundation and all they have to do now is maximize their natural talent. So, what does it take to understand the financial world? It requires gaining a basic understanding of how it works. It is critical that women educate themselves by signing up for online courses, reading articles, or participating in webinars. Moreover, women have traditionally been kept out of family discussions about investments. And it's high time that changes. Every decision they make can be based on the basic framework of budgeting, goal-setting, risk-reward analysis, and emergency preparation.
Despite the progress that women have achieved in general, many of them still lack confidence when it comes to financing and investment. Hopefully, this will not be the case for long. Hence, its important for women to be well equipped with understanding asset classes i.e. fixed incomes, equities, real estate etc and how to manage unforeseen circumstances through risk products like insurance. To be well read can deepen ones understanding and change perspective on investments. So my advice to all the women out there is that lets focus on learning nuances of finance and take investment decisions after analyzing the options that align to our goals and most importantly keep investing in your health and your financial well-being.
Priya Deshmukh Gilbile is Chief Operating Officer, ManipalCigna Health Insurance.