Financial Planning has become more important for women, especially in times like Covid pandemic which has disrupted livelihoods and destroyed thousands of families across the country. According to LXME founder Priti Rathi Gupta, financial independence is an essential life skill every woman should be well equipped with in order to be truly independent. The Covid-19 pandemic and its impact have further added impetus to the importance of financial planning and independence for women.
Planning for the unforeseen and learning to save and invest due to falling incomes have pushed women to take control of their finances in these trying times. In these uncertain times of COVID-19, we have in fact seen circumstances prompt greater ownership from women. Gupta said this systemic shift has arisen from various interests in financial preparedness, personal finances, investment behaviours and challenges faced earlier in the case of saving and investing.
In an e-mail interaction with FE Online, Gupta explained further why women should take control of their finances and the steps they should take for this purpose. Excerpts:
Why should women take control of their finances?
In order to be truly independent, financial freedom should be the topmost privilege that every woman should aim for. Women are born money managers. When armed with the right attributes of being risk-aware, disciplined, making informed decisions, and staying calm under stress, women can go from managing home budgets to smart investors. When women begin to invest and grow their money, they carry the potential to bring about a societal change, because they begin by investing back into their community and children. The future of financial freedom for women is the onset of an evolutionary change, and it begins with a simple adaptation of money management, as a life skill.
What are the steps women should take to take control of their finances?
Women have the knowledge of finance and yet are dependent on the male members of their household to make the decisions. Financial acumen and wealth creation are a joyous experience and if we simplify it and break the barriers between finances and women, the trailblazers of financial feminists would be leading the way in no time.
- Be Aware Of Your Earnings And Expenditure
The first step in the journey of becoming financially fit and independent is to understand your financial patterns. This means that not only is it essential to be aware of your earnings, it’s also important to be aware about your significant expenditure. Use a journal or an online spreadsheet to write it down and understand your financial behaviour. Make sure you jot down all details as they will further help you make decisions accordingly.
- Set your goals right and make them achievable
Set financial goals since the very beginning, especially for short term plans like a trip or buying a car. For long term goals, you can consider investing in real estate or decide to use different investment mechanism to create wealth, depending on your goal. Keep aside at least 30% of your monthly income to fulfil these goals.
- Make Use of Financial Investment Tools
Time-based investment tools like Systematic Investment Plans and incremental investment through lump sum helps in building a healthy portfolio. SIP is among the most effective tools to invest. Automation is a great place to start and reach financial independence as fast as you can. The strategy is to make, save, and invest as much money you can. Try to increase the automation savings amount once every few months.
- Create an emergency fund
An emergency fund can help one stay afloat in times of a financial crisis such as the current one. Also, this fund should be quickly and easily available as cash, if and when required because there is no point of having money which is not liquid since you won’t be able to withdraw it when emergency strikes.
- Constant knowledge and reading
No freedom can be achieved overnight, and the same goes for financial freedom as well. Staying up to date with the trends and terms can help expand your knowledge and avenues. Whether you do it with the help of a financial advisor or by taking courses online, but constantly upgrading your knowledge will help you feel more confident and adapted to the financial world.
- Turn To Professionals When The Need Arises
It is important to reach out to professionals like registered financial advisors, who in turn would help you select and decide the best financial tools and investment avenues available in the market to achieve your financial goals. You could also consider joining a financial community like being LXME, etc., where motivated individuals and members, with a common goal, are willing to share tips and discuss their journeys. Such platforms help you be accountable, and you can learn techniques to manage your money better.
What is LXME?
LXME is India’s 1st Financial Platform for Women, which aims to bridge the gap between women and finance with a community led expert-backed hassle-free platform curated for women. Women have differentiated financial needs; differentiated earning potential, career peaks, career breaks, longer life expectancy and a different approach & mind-set toward financial planning. It is thus imperative for women to take charge of their money through smart planning and investing best suited for their needs. Financial Freedom is the topmost privilege for any woman and LXME helps inspire that.
Today, LXME is a fast growing robust community led financial management, planning, and education platform for women. We aim to inspire a wave of financially fearless women to actively manage their money and achieve their dreams.