Managing household budget is something which every woman has been doing efficiently for many years. Growing up, I learnt my first money management and budgeting lessons from my mother. It was not a formal training but by just looking at how she was able to plan expenses to the last rupee, I learnt a lot as to why financial planning for women is mandatory.
Multiple studies across developed countries as well as experience of micro finance companies in the most under-developed regions of the world have pointed to a common fact that women manage money much better than men. Inspite of being better money managers, one of the things which women tend to not do a lot is long term financial planning (See a sample financial planning process below)
Why financial planning for women is mandatory?
1. Women live longer than men
Multiple studies have shown that women tend to outlive men. There have been many reasons attributed to the same like testosterone toxicity, by product of genetic forces (derived from Darwin’s theory) which maximizes length of time during which women can give birth and raise children and possibly grand children.
Longer life span for women introduces important challenges on financial planning front. As women are more likely to outlive men, they will need financial resources to ensure they live securely in old age and so financial planning for women is mandatory.
2. Women have more volatile career paths
Women’s careers are subject to much more volatility then men. Giving birth to kids and raising them results in long breaks from work and hence significant disruption on financial side in terms of cash flows, while most of these decisions are planned along with your husband it’s imperative you consider all these scenarios while planning your finances
3. Increasing Divorce Rates
With increasing economic independence of women as more women get into job market then ever before, longer and more strained work hour’s marriages have been under pressure across the board resulting in higher divorce rates. Divorces are not just an emotional strain but they are a big financial strain too. It is imperative that you do proper financial planning which can help you manage your finances better in any unforeseen circumstances. Hence, financial planning for women is mandatory.
4. Women as equal contributors in running house
Most of the metros and big cities proportion of double incoming families are increasing. Women are not only contributing to running the house but are increasingly becoming equal contributor. More than ever its important for working women to start financial planning early as it will impact not just their personal well being but the well being of their future families.
Essential financial planning tips for women
Now that we understand the reasons why financial planning for women is mandatory, let me summarize some quick financial planning tips for women.
1. The first step to great financial planning is to secure you against any eventualities so go ahead and buy a good health insurance. If you are married, sit with your husband and buy a right family health insurance plan.
2. Always set up financial goals and review these goals as you go along.
3. Saving and investment are 2 different things. Don’t save, invest.
4. If you are married do the money talk with your husband and if possible set up a joint financial plan
5. Have a proper retirement plan assuming you might outlive your partner.
6. Over long term equity markets normally outperform all other asset classes. Invest for long term
7. Raising kids is becoming costlier every day provision properly for your kids wellness (education expense, marriage expenses) etc.
8. If you need help to create a financial plan .Hire a financial advisor .
Courtesy : Life Hacker