scorecardresearchMother's Day: How to maximize the impact of financial empowerment

Mother's Day: How to maximize the impact of financial empowerment

Updated: 14 May 2023, 01:09 PM IST
TL;DR.

  • Being financially empowered includes being interested, informed, and getting initiated into the habit of managing your finances on a regular basis.

The first step to financial empowerment for a woman is to take an active interest in financial planning for self and family.

The first step to financial empowerment for a woman is to take an active interest in financial planning for self and family.

Financial control is one of the critical dimensions of being empowered as an individual, both for a man and a woman. However, recent surveys indicate that only a quarter of women and less than half of working women in India take their own financial decisions.

Being financially empowered includes being interested, informed, and getting initiated into the habit of managing your finances on a regular basis. Hence, the first step to financial empowerment for a woman is to take an active interest in financial planning for self and family.

Financial planning is the process of managing your day-to-day finances (short-term), while looking ahead into the medium and long term towards periodic goals. Wealth creation through appropriate asset allocation is a key component of financial planning. Data has shown that women on average live longer than men however not necessarily healthier, so a very important aspect of financial empowerment for a woman is to be able to spend twilight years comfortably.

If you are a working woman, start early and start young on your systematic savings and financial planning journey. Assets created early on in your career may serve you well in your family years when some more flexibility is desirable. Life insurance should form a necessary part of your financial portfolio to safeguard your family’s interest in the unfortunate event of your demise. Several life insurance companies offer premium discounts for female customers. Post Covid-19, the need for insurance for eventualities such as life and health expenses have assumed greater importance for everyone, especially those with dependents. Health insurance plans are widely available as family floater options, with a blanket sum assured (expense) limit built to cover several members of the family.

Also Read: Mother's Day: Value of saving and investing should be taught at a very young age, says Royal Sundaram Insurance's Veena

There are a host of savings and investment options available in the market today. Traditionally, bank fixed or recurring deposits have been a preferred savings option for investors looking for the safety of guaranteed returns. On the other end of the spectrum is the buoyant equity market with a demonstrated track record of robust long-term returns, although there may be extreme short-term volatility.

In the last few years, mutual funds have provided an option to investors to participate in the debt and equity markets as per their risk appetite (via choice of fund) in return for a fee paid to the fund house. Insurance also provides various types of insurance-cum-investment plans including for retirement planning spread across the non-participating (where returns are guaranteed), participating (where eventual returns are based on performance of the company’s fund) and unit-linked (where returns are linked to market performance of assets) segments. Systematic and structured investments diversified across various financial instruments and physical assets can enable women to achieve their financial goals at various life stages. There is professional advice available for financial planning, as is the plethora of information on websites.

As a mother, milestones in a child’s educational journey should assume adequate importance in your financial plan. There are insurance plans designed to meet this specific need, generally labelled as child plans or moneyback plans which provide cash payouts at specific points during the policy term. There are also some government schemes, such as the Sukanya Samriddhi scheme for a girl child offering tax-free guaranteed and reasonably high rate of return, albeit with a lock-in. Ring-fenced savings and investments in the child’s name in any instruments early on go a long way in entrenching the importance of financial planning in the child’s value system as a necessary skill.

There is no freedom like financial freedom. Women can build finances to last, as they build and nurture everything else. If you are a non-working woman with the primary responsibility of home and children, you can still contribute to effective financial planning for yourself and family by educating yourself on the many savings and investment opportunities available in the financial markets.

Review your finances periodically and rebalance your portfolio as per your changing lifestyle and savings needs. Actively discuss finance and financial planning with other women of all strata and spread awareness, contributing to the necessary cause of financial inclusion and empowerment of women.

 

The author of this article, Bhavna Verma, is Appointed Actuary, IndiaFirst Life Insurance Company Ltd.

Article
60% women investors still prefer traditional investment options
First Published: 14 May 2023, 01:09 PM IST