Maintaining a healthy relationship with money is quite important. Women are now independent, exploring the world of possibilities. But is it enough? There is a lot more to it that every woman has to know about and it is “Financial Freedom.”
Earning money is not enough, the way you are spending it, saving and investing it are the two things that matter. I have seen some women who despite earning gave the finance management responsibility to their spouse or family. I won’t say this is wrong but being financially literate and managing your own finances is the need of the hour.
Which is the reason why I have made this article. I have been through many financial hiccups, faced so many issues and sorted them out with some guidance from the internet and close people. I thought of mixing different finance strategies that I implement to make my life better and future secure at the same time. Stick till the end to see some amazing and practical tips.
This should be the first step. Start early. I know that there are so many people out there who work at some small jobs and live paycheck to paycheck. Saving up your money when you are barely meeting the ends might seem impossible. The first thing you, me and everyone will do at this point is postpone. You will think that let’s start saving when I get a good job with better pay, let’s do it when the debt is cleared, etc.
Remember, these kinds of excuses are the first thing that you have to get rid of. There are so many people who will say that you have to save 33.3% of your income but no you shouldn’t.
So, just save 15% of your income on a monthly basis. If you are barely meeting your requirements, then try and stay below your means. You can start it from shifting to a smaller house to making some small changes to your lifestyle. Believe me, this saving is worth it.
All this savings will go to your emergency fund which is like a cushion for you to fall back on when things don’t go as you planned. This is as important as air to live, so do not neglect.
Saving up the amount is not going to help you unless you invest it somewhere. Let your money work for you. Where to invest and how to? These are very important and you have to get guidance from a financial planner if you want to.
Some of the things that I personally do are-
- Invest in Stocks and Mutual Funds
- Invest some amount in Gold, FD and RD bonds
- Save some amount in an account (emergency fund)
You know once you are up and saving, divide the amount into long term and short term requirements. Now, everyone can buy and sell stocks with a finger swipe on their mobile but remember that the stocks and mutual funds are meant for the long term and try to keep them as they are.
Then save some percent of it in an account from where you can have access immediately. Like a separate savings account which provides an interest percent of 4%. This is for any kind of emergency use.
So, categorise that 15% you have in hand and invest some wherever you want whilst the put remaining in your savings account. Remember, investment is important considering the inflation that can happen.
Hmm…What is Inflation? The inflation means decrease in the price value. Let us take an example that you love to save your money in the piggy bank and there are like 10 piggy banks filled with some 2000 rps notes for some 10 years. Now after 10 years, let us say in 2031 you break all of the piggy banks due to an emergency.
Can you buy all the things that you bought for 10 lakhs in 2021 in 2031 too? No right! This is what inflation means. The physical money that you have is same but the value of it varies. It keeps on happening so it is important to ensure that your money grows along with the inflation.
Keep a Check on Your Budget
Being financially disciplined matters. With social media, eCommerce platforms, you can shop for anything and everything by just sitting at your house. This gives you a chance to exploit and splurge your money.
You have to be clear with your budget basics. Divide your salary into different parts- savings, basic needs, fun expenses. The basic needs are shelter, food, internet connection, power connection, EMIs that you have to pay, basically everything that you have to pay without fail on a monthly basis.
Fun expenses are the things that you enjoy doing but not necessary. This is where you have to cut back whenever needed. Enjoyment in life is important but so are savings so just don’t hesitate about saving money.
Pro Tip: If you are a shopaholic like I was once upon a time and retail therapy heals you from any kind of pain then follow this tip. Starting from today, record your expenses no matter how small it is. Keep the track of where your money is going on a daily basis. This will give you an idea as to where you are spending. If you are impulsive and want to purchase something, wait. Put the product in your cart and wait for a few days. This will give you time to think and realize whether you really want it or not. If you keep it in the cart for 10-15 days and go without any hassle, then that is it. You don’t have to purchase it and eventually you will lose any interest on it too.
Clear your Debt
From credit card bills to student loans, start clearing your debts. The banks and financial institutions will ask you to pay the minimum amount and stretch the loan for as long as possible. This may sound like a favor they are doing for you but it is not.
As the loan repayment time increases, the interest increases. For a loan of some 2 or 3 lakhs, you will be paying an additional 2-3 lakhs in the form of interest. This must be stopped. Start repaying this debt as much as you can on a monthly basis. This will reduce the interest that you have to pay.
Review and Assess
You need to check where you are financially once every six months or a year. Keep an excel sheet and update all of your monthly financials as soon as a month ends. Then track this excel sheet and get an idea on what you get, how much you owe, what are the other incoming and outgoing sources. All these will help you in understanding where you are financially at and you can plan your next steps accordingly.
This is it. These are some tips that every woman has to follow. I am not going to say whether a credit card is good or bad for you. For some people it indeed comes in handy while there are so many others who misuse it. So, it completely depends upon you. However, if you use your credit card, ensure that you are repaying the bills in time and it is not some minimum amount.
Cheers to a financially disciplined and literate life 🙂