Gone are the days when it was a man’s world. Women today are the veritable master of the game and know how to handle their portfolio, be it on Twitter or their money.
Modern working women claim and deserve gender equality. Working women do not appreciate the differentiated treatment accorded to them when it comes to taking financial or any other decisions.
Aspirations and objectives of working women do not differ from those of their male counterparts. Hence, the integral precepts of the economic system do not discriminate between men and women. Future financial goals–funding the higher education and wedding of offspring, purchasing a residence and a vehicle, going for overseas vacations, and planning for retirement–are commonplace for both genders.
Maintaining a specific model of livelihood becomes requisite.
Let us now consider some key decisions which all working women must draw to assure that they enjoy financial well-being.
- Protection Cover
First, if there are household members dependent on them, they must ensure that they have adequate coverage in terms of impairment and life insurance. It is prerequisite to safeguard the family members just in the case of an event where the earning female member becomes incapacitated or impaired because of any disease or mishap, etc. The thumb rule here is that she must have a life insurance policy and overall disability plan coverage equivalent to ten times her annual revenue.
For Example: If a woman is earning Rs 10 lakh per annum, then she must have a life and disability insurance cover of Rs 1 crore to ensure that family members feel protected in case of any unfortunate eventuality.
- Retirement Planning
Apart from providing stability to family members, working women have to plan for their retirement needs well in advance. Please remember, it is not typical for all working women to retire at 60. Retirement will depend upon their profession. Sportswomen, Air Hostesses and Celebrities do not have a long working span. Hence, they require carrying out an individual strategy for premature retirement and ensure that they can live for the rest of their lives by accumulating a corpus and by investing in various asset classes: equity, debt, and real estate, etc.
- Gold
Women have a particular affinity for Gold. The thumb rule for investing in Gold is that it should account for over 10 percent of their entire financial portfolio, either in the form of physical gold (ornaments etc.) or paper Gold (Gold mutual funds or Gold ETFs & Sovereign Gold bonds, etc.).
- Asset Allocation
All working women must have some exposure to equity mutual funds through Systematic Investment Plans (SIPs) for generating long-term wealth. They too need this for attaining financial targets such as education/marriage of their children or retirement, The thumb rule of asset allocation is that 100 minus the age should be the percentage allocation to equity mutual funds; 10 percent should be in the Gold, and the balance should be in debt instruments such as PPF, EPF, Bank FD, and Bonds.
To sum up, all working women’s financial portfolios must include 3-4 mutual fund SIPs equal to 20 percent of their monthly income, regular contributions to the Public Provident Fund, and NPS account for ensuring retirement planning. Regular pension for life, besides having adequate health insurance and Life/disability insurance is also essential.
- Documenting the Financial Plan
It is also important to mention here that all working women must get a financial plan made as a document, and they must implement it and keep rebalancing their portfolio by reviewing it at the half-yearly interval.
- Making the Will
They must ensure that they make a proper ‘Will’ and it distributes their total investments in the proportion desired by them. It should be done much early in their life and must be shared with close family members for easily claiming investments in the eventuality of sad demise.
- Limiting expenditure.
Working women must ensure that they learn to limit their expenses within their income levels and not resort to debts, loans or excessive credit card spends at any point of time. Stretching your expenses beyond your limit can lead to financial stress and compromise your future comforts.
Hence, it becomes imperative for working women to be in control of their finances, to stay fiscally disciplined, and to remain well-planned.
Thanks and Regards.
Anuj Surana
Quill & Parchment 