Summary of this article
Women's retirement planning should be different from men.
Health insurance and term insurance is necessary for family security.
Women should plan their career breaks and accordingly save and invest.
Bhai Dooj celebrates sibling affection and the promise of protection. While sisters pray for their brothers’ longevity and well-being, brothers vow to protect them. However, financial advisors emphasise adding another dimension to this by encouraging women to safeguard their own financial futures. They suggest working women secure their long-term financial independence and security by protecting and growing their wealth.
Historically, women have been managing household budgets and daily household needs. However, many working women still keep their personal financial goals on the back burner in their priorities while bringing up their children and taking care of their families. But merely earning well does not mean financial security until it is managed in a way that can support the individual through every stage of life. A thoughtful financial plan can provide working women the necessary confidence to make choices freely, whether it’s career risks, raising a family, supporting parents, buying a property, or retiring comfortably.
While retirement planning is crucial for everyone, it is not a one-size-fits-all plan for everyone. For women, the financial strategies need to be different, as their life trajectory is different from a man's. They experience career interruptions for childbirth or caregiving, have longer life expectancy, and usually get unequal pay. That’s why their financial planning should address these gaps.
Here are seven tips for working women to secure a financially independent future.
Emergency Fund: This is the first requirement to safeguard against any financial exigency. One should build an emergency fund that can cover at least six months of essential expenses. This fund can be kept in savings bank accounts, liquid mutual funds, or in any other instruments where it remains readily available for use and can be used when required.
Independent Ownership: Working women should invest their money in their own name by opening a bank account, demat account, and investing in fixed deposits, mutual funds, and retirement accounts to build an independent financial identity and feel responsible for managing it.
Retirement Planning: Women should start retirement planning as soon as they start earning by contributing regularly to the Employees’ Provident Fund (EPF), National Pension System (NPS), Public Provident Fund (PPF), or mutual funds, so that their savings get the benefit of compounding independently of their spouse’s retirement corpus.
Risk Coverage: Experts suggest having adequate health and life coverage, especially if a person has dependents. So, working women should not ignore buying these insurances to secure not only themselves but also their family.
Career Break Management: On many occasions, a career break is considered a given in a woman’s life. It not only impacts career growth, but also financial independence in the short and long term. So, women should plan for it and systematically grow by building savings in advance and maintaining systematic, regular investments during their career break.
Goal-Oriented Savings: Importantly, they should set their personal goals clearly, beyond their routine household needs. It could be their further education, travel, property purchase, early retirement, or entrepreneurship. These need to be planned with timelines, and accordingly, they should plan their monthly investments.
Annual Review of Portfolio: Last but not least, they should actively engage in their own money management by regularly reviewing it. It could be quarterly, half-yearly, or annually. The review can help revise the investment amount and duration as per the salary increment, changing family needs, growing age, etc.
This Bhai Dooj, while exchanging gifts and blessings, working women can give themselves this most valuable gift: financial independence. A disciplined financial plan can protect not just the present but also secure the future.
