Find out how women can manage their own finances effortlessly

Financial experts say that women should plan and manage finances at every stage of life, so as to remain financially independent throughout her life.
A financial plan is based on three things- one’s requirement (goal), time frame and ability to take risks
A financial plan is based on three things- one’s requirement (goal), time frame and ability to take risks
Updated on Feb 08, 2021 08:37 PM IST
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ByHT Brand Studio

Vidya Prakash (name changed), a 40-year-old homemaker, whose husband died recently due to illness, is trying her best to support two school-going daughters. With zero investments and savings, she finds it difficult to make ends meet.

Vidya is one among the many middle-class women who struggle hard financially when the spouse dies or leaves them. They end up managing all household expenses on their own. Unlike women in the developed countries, in India, only 20.7% of women were in the labour force in 2019, down from approximately 30% in 1990, according to Statista, a company that specialises in market and consumer data.

The labour force participation rate is an important indicator that reflects the economy’s active workforce. Women, irrespective of age, should plan finances on their own and shouldn’t depend either on parents or on a high-earning spouse to make choices for them.

One of the common mistakes that women do is that they think and plan for only short-term. For instance, if a woman enters the workforce at the age of 22, she plans her finances only for another five years, till she gets married or till she gives birth to a child. Financial experts say that women should plan and manage finances at every stage of life, so as to remain financially independent throughout her life.

Saranya Rajendran, a 37-year-old unmarried single woman, who works for an IT company in Bengaluru, says she used to run away from finance and its jargons in the late 20s. “But when I started earning more, I took time and started planning my finances. Not just a single woman or single parent, every woman should plan, save and invest for long-term. I have invested in real estate and also in mutual funds through Systematic Investment Plan (SIP),” Saranya says.

Plan your finances well

Be it a single or divorced woman, a financial plan is based on three things- one’s requirement (goal), time frame and ability to take risks. To this extent the tenets of basic financial planning will apply to women as well, says Vidya Bala, co-founder of

“Have a risk cover if you have dependents; create an emergency fund for the next 6-8 months of living expenses; and have goal-based investing. In case of divorcees, they need to plan alimony and how much that will help sustain one's living expenses needs to be drawn with the help of a financial planner,” she explains.

A contingency fund is created to meet any unforeseen expenditure. In the case of Vidya, if she had created an emergency fund it would have helped her a lot during the time of crisis. It is of utmost importance to create an emergency fund, which covers your expenses for at least six months.

For those who are risk averse, sticking to simple but regulated (avoid gold schemes of jewellers or chit funds not registered) products such as bank Fixed Deposits or Recurring Deposits, post office small savings are good enough, the financial expert says.

If you are a young woman with dependents then you should never postpone your investments, as single mothers need to plan a lot for their children’s educational expenses. Financial experts say they can invest in equities and bonds, among other asset classes. The focus should be on growing your wealth. SIP is a brilliant option and you can start investing with just 500 a month.

If you are a middle-aged woman, then you have to start accumulating money for a stress-free retirement life. It doesn’t mean that you should plan your retirement only in the middle age. It means the focus should be more on growing money, considering retirement. Irrespective of age, one needs to purchase health insurance that covers you and your children. As it will cover all health expenses, you need not shell out money from savings for any health emergencies.

If you are a retired woman or will retire in a few years, then you should focus on a proper portfolio allocation so that your retirement corpus will be protected and also will grow. You can consider Senior citizen savings scheme (SCSS) and Pradhan Mantri Vaya Vandana Yojana, apart from parking money in liquid funds and equity mutual funds. In this way, your retirement corpus will be safe and will help you in beating inflation.

Mutual funds are great investment vehicles

“Women who have long-term goals and can take some risk, they can go for mutual funds with proper asset allocation to equity and debt, based on the time frame of goals. Mutual funds are great investment vehicles for all investors. SIPs, which are disciplined monthly savings, ensure small sums can be invested in mutual funds over a length of time. But knowing which products to use for different time frames is important in MF. You can't have a goal that is one-year away and invest in equity funds. Nothing more than a liquid fund will fit in such a case,” explains Vidya Bala.

Financial experts say women are disciplined and stick to a plan and the growing number of women investors in mutual funds show that investing in MFs through SIPs will help women get higher returns in the long-term.

“It is prudent to have gold in a portfolio, but women should ensure that they don’t over allocate to it. If the investing part is mostly done by your spouse, it is better to have a re look now. It makes sense to take disability insurance to protect your income if you are unable to work due to illness or accident, says Satheesh Kannan, investment advisor at FinIntellect.

Don’t avoid long-term wealth building products

Though you can ask suggestions from your friends/colleagues or family, don’t let that take control of your finances. Financial experts say women, even if they are homemakers, should actively participate in financial decisions and investments of the family. Vidya Bala says, “Don’t go for seemingly popular and unregulated products like gold schemes, unregulated money collecting schemes. Also, being very risk averse, women should not avoid long-term wealth building products such as equities.”

Women should plan and invest their money towards securing their own future. Instead of postponing investments, they can start with SIPs and also plan for a diversification of their financial portfolio. Also, they should discuss with financial advisors and do follow-up on investments, to weed out risks, if any.

Key takeaways

1) Financial planning is vital for women, irrespective of their marital status. Secure your own future by making right financial decisions. Instead of depending on spouses, participate in financial planning of the family and children.

2) There is nothing wrong in allocating money for your own future. Be at ease with finances. Have a mix of short and long-term goals.

3) Mutual funds are a good investment choice and you can invest via SIPs to achieve your goals.

This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.

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