Even if traditionally women do not do it alone, managing money and ensuring financial health is not such a difficult thing, as this writer found out.
It was about a decade ago at the age of 32 when I was working with ICICI Bank in Mumbai that I decided that I am most probably going to stay single. But I realized that if I have to stay single and grow old alone, I have to ensure 2 things:
Sounds funny, but that set me out on 2 of the biggest journeys of my life:
Though I have worked in the US off & on and earned a salary in dollars that hasn’t meant that I am filthy rich. But yes, I did buy a house and hopefully will repay my home loan by this year.
But the way I look at it now, both the goals were interrelated. They were both about my health – physical & financial.
As a single woman, the biggest satisfaction I feel is about being in control of my life & it comes because of financial independence. Financial independence does not come merely by making your livelihood but also by being able to manage your money without help from anyone or if you need help, you know where to go and what to believe.
I had been wanting to write my first article for Women’s Web for a long time but could not figure out what to start with. Then one day one of my female friends asked me if I could help her manage her finances by advising on how to invest.
It was then that I decided, let me start with something relating to managing your Finances. But then, I wondered, all newspapers & TV channels like CNBC are full of articles on financial management. How was I going to be any different?
I don’t know – but maybe because I am not trying to sell anything to anyone, belong to the great middle class which always has big dreams & small means, and also because I am a woman who has done this for herself, I want to tell others of my ilk that they can do it too.
So, ultimately I am writing this – not to be different but to share how I manage my money as a woman and to emphasize the fact that you don’t need to be an expert to manage your finances.
But a few points before we jump to the basics of financial management:
And therefore, not good with managing money leaving financial management to male members in family. But this is not true. Most of the CEOs of banks in India from Arundhati Bhattacharya, heading SBI to Chanda Kochar or Shikha Verma & Naina Lal Kidwai are women. So, we are really good at it.
But at the same time, it can also be a contentious issue, therefore good financial management can also mean better relationship.
Men tend to take more risk, maybe the macho spirit in them makes them rash. But what I have learned over time in managing my money is this – While it is important to earn money & maximize returns, it is equally or perhaps more important not to lose money you have already made. Women being a little cautious & risk averse are able to follow this tenant. I credit the relative stability of our banking system during the recession triggered by sub-prime lending in US to Indian banking being controlled by women..
I will not deny this. I definitely feel women do tend to go overboard with shopping. Financial management is not just about investing, it is also about saving & more importantly meeting you financial obligations.
When you get into a habit of managing your finances & at the end of your month, your balance sheet seems to be going in negative – you do become more cautious about how you spend. I often advise my shopaholic friends to buy a Home & take a Home Loan – when there will be an EMI going every month, you will start seeing part payment of your Home Loan in every shopping spree of yours.
But even before we start talking of how to invest money, we have to understand how to force ourselves to save money – because we middle class people have often less means but big dreams. Therefore, it is a good idea to either start a recurring deposit or have a separate account where you transfer money at the beginning of month. When we have less money in account, we will start spending less too.
but it is nothing to be afraid of – all it means is the following:
Know your reality – your limitations, capacity & earning years
Know your obligations & Liabilities. This can range from
Know your basic needs – the bare minimum without which you cannot manage. If you are a single person without a job, supported by your parents, perhaps 10 to 20k may seem like an amount with which you can eke out a living. But if you are single, have no family support and no home – you may need to provision for more. If you are married, have kids, parents to support, no house of your own – you may be in a bigger mess if you don’t manage your finances well.
Know your wants and bucket them into Must have, Good to have, can wait. You want to have a huge mansion, but your need is for only 2 BHK apartment and your reality a 1 BHK apartment, you should know where to bucket your want.
Know your risk appetite – However, remember that your risk appetite has to match the goals for which you are saving. Your needs and obligations you will not take any risk with. Your want is where you may have to get a bit more courageous.
In this article I will touch upon a few basic principles of Financial Management rather than list out all possible financial instruments for which we can get information from multiple sources. These principles are:
I would have loved to cover more on financial instruments, however, I would restrict myself to just starting the journey to financial empowerment in this article. But I am pretty sure once you start on the journey to managing your financial health remembering the principles listed above, you will find your way.
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