Financial planning for women is a necessary part of their everyday life. The primary reason is to achieve financial independence. Financial independence gives you the freedom to live life on your terms.
A financially secure woman does not have to depend on others for her livelihood. Hence, it also increases self-esteem and self-respect in women.
Follow these steps below, and make your financial plan!
Step 1: Write Down Your Financial Goals
A financial goal is what you hope to achieve with your hard-earned money. The goals come in short, mid, and long-term intervals.
Ask yourself these questions:
- What are my financial goals for 6 months to 5 years (saving for a trip, luxury item shopping, for a gift for your spouse or parents)?
- What are my financial goals for 5 to 10 years (saving for overseas trips, pilgrimage, child’s higher education)?
- What are my financial goals for longer than 10 years ( retirement fund, investing for child’s marriage, saving for own house)?
Once you know the goals you can better plan your finances and you’ll get an idea of how much to save or invest. Hence, it makes the whole financial planning target-oriented.
Step 2: Create a Budget
Budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you. To create a budget, you typically need to allocate funds for the following:
- Housing expenses such as rent, mortgage, maintenance, repairs, phone, utility.
- Healthcare such as dental, vision, medication, supplies, etc.
- Transportation such as vehicular expenses, gas, and oil, repairs, maintenance, etc.
- Food such as groceries and dining out.
- Personal expenses such as clothing, gifts, personal care, etc.
- Entertainment expenses such as travel, sports, hobbies, pets, etc.
- Savings towards financial goals and insurance.
Sum up all these and subtract them from the earring and if you have any leftover amount, either you can save that money for urgencies or you can use that to fulfill your extra wants.
Step 3: Prepare an emergency fund
Emergencies are a part of life therefore it is important to plan and save for them so that you can sail through them without borrowing. Hence, save aside 10% monthly to tackle those emergencies (job loss, medical urgency) your insurance won’t cover.
Step 4: Get the right insurance
Insurance is essentially the backup plan that will protect you in difficult circumstances. Your insurance coverage should include health, life, home, or rental.
Here are tips to help you choose the right insurance plan:
- Look for the right coverage: Choose a plan that secures against a wide range of problems.
- Prefer family over individual health plans: Purchase a family health plan to enjoy maximum benefits at a more affordable price.
- Network hospital coverage: Always prefer an insurance provider that has a wide network of hospitals across the world.
- Choose a plan with lifetime renewability: Always check whether the plan offers limited renewability or not.
Step 5:Plan to pay off debt (if any)
Clearing off debt should be one of your priorities. Between sky-high interest rates, large minimum monthly payments, and the damage to your credit score, you’re better off paying your debts first. Create a debt pay-off strategy and allocate 5–10% of your money to clearing off loans so that you can live peacefully.
Step 6: Plan for retirement
In order to have the lifestyle you dream of in retirement, you need to plan and save adequately for it. Financial experts recommend to start saving early so that your retirement savings will have more time and potential to grow through compound interest. Therefore, try to put aside 7–8% monthly in a retirement account like 401(k), or a similar tax-advantaged retirement account, like an IRA.
Step 7: Review your financial plan monthly
Once you have your financial plan outlined it’s important to review your plan frequently and make the necessary adjustments if your goals or the circumstances around your life change.
When you check infrequently, it’s easier for you to deal with unplanned life occurrences, bounce back from setbacks, and accomplish your financial goals.
A financial plan is a roadmap to achieving all your financial goals. A proper financial plan will give you freedom, and you won’t have to be dependent on your male counterparts for your financial needs.