7 Money Management Tips to Help Women Become Financially Independent

With an increasing number of women emerging as front runners in various fields, the need to plan a secure financial future is paramount. Gone are the days women need to be dependent on their spouses—or any other male member of the family—to meet their economical requirements. Besides juggling personal responsibilities, they are well capable of holding successful jobs and leading financially independent lives. 

"On account of International Women’s Day, we at Scripbox, conducted a survey to understand women’s investing behaviours. Expectedly, we learnt that 60% women feel most confident when in control of their money," informs Rutvi Tiwari, Channel Development Head at Scripbox. However, minor financial hiccups and economic hurdles could jeopardise the possibility of carving a safe and settled future. And to avoid this from happening, Rutvi shares expert tips that will help you plan ahead.

Take note, ladies.

Look at Wealth Creation From a Holistic Point of View

Wealth creation isn’t just about investing in mutual funds. It’s about taking a holistic stance on investing and securing all aspects of our financial lives—be it buying insurance for safeguarding our future, building a retirement corpus for our financial independence, or preparing an emergency fund for adversities such as the current pandemic, and so on.

Setting Aside 20-30% of Earnings Every Month For Investing

Crisis or no crisis, saving at least 30% of your income regularly (monthly) is a golden thumb rule! Save more = invest more. Going through a budgeting exercise and distinguishing between needs and wants can help you get there. Always begin with putting 30% into your savings bucket before you allocate money to spend.

Establishing a Retirement Plan

There are many who believe that retirement is a distant reality; planning for which tends to be postponed to a later stage. Instead, it’s better to start setting aside money early on for your retirement, in order to create a sizable corpus—with lesser but more frequent investment values. Give your savings the opportunity to compound over a longer period of time. 

Creating an Emergency Fund

The need for an emergency fund is certainly the need of the hour. While we hope to get out of this global crisis soon, we can’t be sure about how things will play out over the next few months, from an economic perspective. Those who have been squirreling away for such a rainy day may be able to sleep just a little better at night. Having some kind of a financial cushion not only helps move forward through tough times, but it also rewards you with peace of mind. If you don’t already have an emergency fund in place, this is an opportune time to start.

Investing in a Mix of Debt and Equity to Meet Short and Long-term Goals

Before investing, you must assess your investment horizon and the goals you are trying to achieve. Use this to decide whether equity or debt funds suit you more. Investment horizon is the duration for which you will not require the investment amount for any of your regular expenses. Investing in equity mutual funds makes sense only if your investment horizon is 5 years or more. For short-term investing, debt mutual funds are more suitable. Mutual funds are linked to market instruments, so volatility, especially in equity, should be expected. But remaining invested for a longer term would help you make actual gains through the power of compounding. Be prepared to see volatility in the short run. However, in the long run, the accumulation and wealth creation make it meaningful for your personal financial goals.

Believing in the Long-term Nature of the Market & Staying Invested Despite Market Volatility

Volatility often reflects the sentiment of the market players—among other things—and changes with time. But it doesn’t really predict the long-term future. Staying invested through a crisis has rewarding returns! For instance, if you had invested when the Global Financial Crisis hit and held on to your investments over the next 10 years; the Sensex, which was at about 17,650 in January 2008 (and had crashed all the way down to 8700 points by October 2008), quadrupled to about 38,000 points by September 2018. 

Seeking Advice From Wealth Managers, Depending on Your Financial Goals

Wealth managers can help investors manage the risk on their investments—through behavioural interventions and by helping them stay in control of their emotions. A wealth manager can offer unbiased advice that is based on contextual logic and knowledge of the market. By combining behavioural coaching with education, a wealth manager can communicate the importance of approaching your wealth from a holistic perspective, i.e. staying invested for the long-term and periodically reviewing your portfolios.