8 Baby Steps For Financial Independence That Women Can Easily Take, Even If Not Earning!

Women are born managers; they can always manage the finances better than men if given an opportunity. Here are small steps for financial independence that women can take.

Women are born managers; they can always manage the finances better than men if given an opportunity. Here are small steps for financial independence that women can take.

In many homes, regular household expenses are funded by either both husband & wife, or just the husband, but they are always managed by the lady of the house. She the one who decides how much fund is to be allocated to which head starting from groceries, kids’ expenses, to taking care of expenses for various functions at extended family.

Nest eggs

It’s evident from women’s stories that women always tend to save a secret amount whether they work at home or work for the home. Most of the times the husband, children and other family members are not even aware of it. That used to be the emergency fund of the lady of the house. After demonetisation many women lost these nest eggs to their husbands. Yet, a different era of banking revolution has started.

Savings in gold

In earlier generations, many women invested in gold with their secret money, which used to be beneficial during the time of a financial emergency. The reason behind this was the lack of access to a formal banking system. Until a few years back, gold price used to increase exponentially, but since the last decade or so, there hasn’t been much upward movement in the price of gold. So for savings & investments, gold ornaments no longer seem to be a lucrative option. Each time you exchange or sell it you will always forfeit the making charge of the jewellery. In case of hallmarked gold you will always get Rs 1000 less than the prevailing gold price per 10gm of gold. For example, if the present value of 10gm gold is Rs 29,000 you will get it Rs 28,000 per 10gm in case of an exchange, or if you want to take it as cash. Also, women are often very emotionally attached to their jewellery & they don’t spare them until & unless such an emergency arises.

We’ve established that women can be excellent managers of money, and saving from daily expenses is a habit they are not new to. What, then, do they need to do to attain financial independence? Why can’t they take their finances into their own hands?

Steps for financial independence

Single holding bank account

Open a single holding bank account if you don’t have one yet, or if you have one but your spouse operates it or is aware of every transaction over there. Don’t forget to add nominee to it.

Access to banking and financial instruments became much more convenient and hassle free with your own bank account. Do your own research for documents required and the minimum balance to be maintained at various banks & branches.The leading private sector banks though offer a hassle free account opening process, yet the minimum balance to be maintained is higher than public sector banks.

(If you have AADHAR card, PAN card & a passport size photo your job is done else you will require one ID proof and one address proof, along with a PAN card and a passport size photo .)

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Have your bank documents updated and in order

If you want to save the multiple trips to the bank then go with the proper documents and the amount to be deposited. Ask for an instant kit which will provide you with an ATM cum Debit card, internet banking kit, mobile banking kit and a cheque book. Do  register your mobile no and email ID with the bank.

What monies do you deposit if you don’t earn?

Apart from saving from household expenses, you can also deposit the amount you and your kids get as SHAGUN during various    occasions as long as the kids are unable to manage on their own.

Fixed deposits

If you want to play safe you can go for fixed deposits or recurring deposits as per your convenience. You can create these both  online and can also liquidate (withdraw) online at any point of time. The amount gets debited from the account automatically at specified intervals, and upon liquidation it gets credited to the account from which it was funded, on the same day. To avoid tax deduction i.e. TDS  (Tax Deduction at Source) you can submit form 15G or 15H online also.

Investment and tax related matters

Most of the times women are not confident in handling financial matters, and even if they are confident they are never  encouraged to manage their own finances. Even many working women are dependent either on their father/spouse for their  investment and tax related matters.

Banking online

If you are reading this, it means that you are not an alien for the internet. People often shy away from using internet banking or online financial instruments in fear of doing something wrong and losing money. Banking platforms have now become much more secure, and handling them has become easier. Nobody can take any money from your account unless his/her account number is added as a beneficiary in your account, and even if it is added, no transaction can take place without an OTP (One Time Password) which is received on the registered mobile no.

So never ever share your OTP, internet banking ID and password, and the ATM pin, and don’t forget to change them periodically. Always lock your phone, whose number is registered with the bank, to avoid any sort of misuse.

Stepping into the Share Market

Once you become familiar in these basics then you can switch over to mutual funds from Recurring Deposits, and can also invest in the share market after opening a DEMAT account. Do your own research before landing in to any conclusion regarding  investments.

Recurring Deposit v/s SIP

The similarities and differences between a RD and a mutual fund SIP (Systematic Investment plan) is that both are deducted at  regular intervals specified as per the customer, and a RD will give you returns as per the term while opening it (Rate of interest is  decided by the bank and is fixed for the term which you have opted for) whereas in the case of mutual funds your money is  invested in the share market by designated fund managers (Return is not specified but it normally gives more return than RD if  taken for a longer term or at least 1 year).

You can’t withdraw an RD partially but you can sell as many unit as you want to in a mutual fund. Minimum monthly investment is as low as 500 in both of these but in a few mutual fund SIPs it is Rs 1000.

Author’s note: I have studied computers, not finance so I am not an expert in this, but this blog is an outcome of my observations of how women deal with finances, among my family, friends, and colleagues. Though there are some women who manage their husband’s finances, and investments and tax related issues apart from managing their own, yet these numbers are quite few.

I hope this information will be helpful to those who want to take the first steps towards financial independence irrespective of whether they are working at home or working for home. Hope the readers like the content. I will come with a second part of this focusing briefly on mutual funds and the share market. Please keep a watch for it.

Published here earlier.

Image source: Flickr, for representational purposes only.

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