Despite the fact that women are thought to be excellent savers, according to the LXME Women & Money Power 2022 research, 78% of women save less than 20% of their income, 56% save less than 10%, and 14% do not save at all. While many people spend time on special days setting resolutions and evaluating habits and routines, the importance of the new financial year is sometimes overlooked.
“Today, men and women are economically and socially equal, but most women are dependent on their male counterparts when it comes to financial planning,” says Priti Rathi Gupta, financial advisor and founder of LXME, India’s first financial platform for women who shares a checklist for aspirational women to keep in mind when it comes to financial planning.
Be Ready With A Budget At The Beginning Of The Month
Follow the golden rule of budgeting - 50:30:20. The rule of budgeting is a great way to begin your budgeting journey. The rule ideally allocates 50% of your income to needs, 30% to wants, and 20% to savings and investments. This ensures all your financial bases are covered for any contingencies and, at the same time, allows you to thoroughly enjoy your hard-earned income.
Don’t Let Your Emotions Drive Your Spending Habits!
As with most rational decisions in life, letting emotions steer the wheel will only result in rash and irreparable damage. While spending your money is always a joyous feeling, it is necessary to remember that all expenses come at a cost and should always be planned and not impulsive.
It is always necessary to have short term and long-term goals to keep your targets in sight. When you have a vision in mind, it makes it easier with check-points in the journey to help keep tabs on your progress. The easiest goals to start with are target savings, target debt repayment, and an investment roadmap.
Start Investing Early
The early bird gets the worm. It's never too early to start investing, even if it's a small amount. Saving or investing regularly can help you meet your tax-planning goals and yield better returns from these avenues. There are multiple platforms that can guide you into finding the right tools to invest in. It is important to begin investing and watch compounding work its magic over time.
Compare Previous Year Records And Keep Track Of Your Financial Progress
In any journey, it is important to keep track of your progress. Only then can you truly appreciate your growth. Comparing previous year records, in particular to your financial journey, helps keep track of your assets and liabilities and provides a deeper understanding of where to save, invest, or spend your money.
Don’t Put All Your Eggs In One Basket!
Diversify your investments across asset classes to manage the risks and optimise the returns on your portfolio. It is important to note that the sectors that did the best last year may not enjoy a repeat performance this year. By rebalancing your portfolio to its original or updated asset allocation, you take the right steps to make sure that you only invest in the sectors that are going to make the most money for you.
Build An Emergency Fund To Protect You And Your Loved Ones In The Event Of Any Contingency
The pandemic has brought to life the importance of having an emergency fund to contend with any calamities that might cause financial damage. At the end of the day, the security and safety of your loved ones are only guaranteed with a solid contingency plan in place.
Get Health And Life Insurance For Yourself
In line with the previous point, along with an emergency corpus, it is necessary to have health and life insurance. If you have it already, then make sure to check if there’s a need to revise the sum insured.
Learn Something Every Day, Stay Educated
Keep growing in your personal finance journey. Now more than ever, there are new investment and financial assets that can be explored. In the world of NFTs, ETFs, cryptocurrency and blockchain, it is vital to stay up to date with the plethora of avenues available throughout your financial journey.
Plan Your Taxes At The Beginning Of The Year So You Don't End Up Making Unfruitful Decisions At The Last Minute
This is an important part of any strategy or planning. Even though last-minute decisions and changes are inevitable, it is important to structure your tax planning at the start of the year to get the most out of your financial plan.
Create Your Own Financial Plan Because Everyone Has a Different Story!
While you and your colleague or neighbour or even your partner, might earn the same amount of money, your financial priorities might vary. There is no set formula. Each individual is on their own journey, and hence, every financial plan looks different.
It is important to be money-wise. Following this set of rules will help you manage your money better and earn, spend, save, and invest correctly.
Also Read: Financial Parenting: Help Children Understand The Concept Of Spend & Save