Where women and money matters are involved, there has always been a perception that women don’t like to or can’t manage their finances, investments and taxes – especially in India. A lot of that has changed over the years and women are now more active in money related decisions, and here are some additional tips on how women can supercharge their finances.
Women and Money
1. Have a separate financial identity
Whether you’re single or married, it is extremely important and useful to have a financial identity of your own, and one of the first steps is to apply for a PAN (Permanent Account Number) – you can apply for one irrespective of whether you’re salaried, self-employed, or a home-maker.
2. Track your spends and bill payments smartly, set a budget
By nature, women tend to be more prudent when it comes to saving and spending money and using an app like Walnut just helps in managing spends better. You can track spends across different time periods, categories, bank accounts, credit and debit cards as well as wallets. You can set a budget to ensure you don’t overspend. The bill reminder functionality ensures that you pay all credit card and utility bills on time. You can set reminders manually also for cash payments like newspaper, milk, maid, car washer and so on.
3. Understand basics of investing
How and where you invest your money depends on your risk profile and while the stock market would not be everybody’s cup of tea, just keeping the money in a savings account will not let you fulfill your goals. Explore other avenues like PPF, fixed deposits, equity and debt mutual funds. While consulting a financial advisor can be beneficial, it helps if you know how and where your money is being deployed for the best possible returns with minimum risk, and review your portfolio every quarter or half-yearly.
4. Get insurance
With the steep rise in hospitalisation and medical costs, a health insurance cover is a must – you can take one even if you are part of a family floater plan or if your employer is offering one. If you have dependents, get a life insurance cover as well so they are not financially affected in case anything happens to you.
5. Build an emergency fund
A loss job, an illness, a family emergency – all these are unplanned events and can leave you in a financial mess. Review your spends and set aside at least 6-8 months worth of living expenses and commitments in an emergency fund to help you tackle the situation. Money can be kept in a different savings account, a fixed deposit or even a liquid fund.
6. Learn to file your income tax return
If you have several types of investments and transactions, are running a business or are a self-employed professional, you may need a Chartered Accountant to help you. However, if you’re salaried , this is not difficult at all, and you can refer to this step by step guide to filing your income tax return.
7. Get your own credit card, build your own credit score
While an add-on card (with parent or husband) is convenient, having a credit card of your own is useful – not just in terms of ability to spend as you wish to, but also the quickest way to establish a credit score. While paying minimum dues and revolving credit can lead to a debt trap, making payments on time and in full will improve your credit score which can be useful later when you wish to apply for any loans.
Used prudently, a credit card can be extremely useful and you can even get benefits like discounts and cashbacks when shopping, or for emergency payments / purchases when you’re out of cash or not carrying your debit card. Once you have a credit card, avoid giving it up, even if you stop working or don’t use it regularly. It can come in handy when you’re between jobs or have taken a break to begin a family as banks will typically not offer a new credit card at such times.