Anupama writes a letter to her 18-years old daughter. Read what she has to say.
The importance of teaching girls about money cannot be stressed enough – in a country that does not do it purely for patriarchal reasons!
Indian society has come a long way in providing equitable opportunities to enable women. We encourage our daughters to get the best schooling, enroll the girl child in football and other such traditionally male sports, spend as much time, effort and money in admitting them in prestigious undergrad institutes, motivate her as a young adult to drive across the city by herself, take pride in the daughter’s onshore assignment which sends her abroad all by herself.
Why then do we not teach them to take care of their personal finances? Do we not want them to be responsible spenders? Do we not wish that they be financially independent not only in their earnings but also in investing? Lastly do we not want our daughters to be able adults who can make their own sound decisions about money matters?
Most homes though do not encourage, or openly discuss finances with daughters, as compared to sons. Reason often being – since the daughter is not to contribute to the family’s finances as she will be married away. And once married she enters an ecosystem where again the boy and his parents are used to making financial decisions.
So where does the urban independent working woman (for that matter, even a woman who isn’t earning but should know about her finances) of India learn to take care of her own finances and attempt to become a sound investor for her own wellbeing?!
It will be a good start to teach our daughters the value of money right from schooling days. Give them their allowance and teach them how to manage both necessities and luxuries by it. My father helped me open a savings account and parked the money there, which had matured from some child policy plan, when I just started undergrad college. I was given complete authority to spend the money and asked to manage the 4 years of my undergrad including college fees through it. This simple but profound approach my father adopted helped me understand the basics of savings and spending. While this teaches a child how to manage money, she still is a long way to go from managing her earnings and investing them wisely.
Ladies, take charge of your money no matter what age you are. Be aware of your savings and investments.
Keep a tab on your financial goals – make and revise them at least bi-annually. Time based monetary goals are a must to keep finances on track and still achieve your aims along with having budget for luxury spends. Financial goals – both individual and as a family can be achieved by breaking them into smaller doable monthly saving targets.
As the saying goes little drops of water make the mighty ocean, build your retirement kitty slowly and steadily. With increased life expectancy, planning for post-retirement expenses – both monthly and emergency funds for medical reasons should be priority number one for each working woman.
Park it in investments based your age and needs. As a young single earning woman you can afford to invest more into riskier but highly profitable avenues like shares and equities. As a newly married partner, you can start building an emergency fund for you and spouse as well as invest for goals like buying a vehicle and/or house.
As a middle-aged lady you should start keeping aside for post-retirement years in less riskier avenues like Public Provident Fund and NPS. A life insurance is a good cover for your dependents in case of unforeseen and untimely events – no matter what age group you fall in.
Use credit wisely; when paid off in time credit cards can be your best friend to lend you a month’s or more expenses without levying any interest. Keep your fixed expenses on credit while one time and/or unplanned ones on debit – this is a simple way to stay disciplined yet utilize credit limits judiciously.
Take loans where the net interest rate is low and there is an additional tax benefit example Home loans, education loans which charge you interest but also give tax rebate on interest paid, hence lowering the effective or net interest rate.
So girls, don’t let your hard earned money lie idle, make it work harder. And be the one to understand and decide which investment tools are good for you. It is no rocket science and even if it is, it’s worth it!
Image source: By Poppy Thomas-Hill (Flickr: Girl Purring Money Into Piggy Bank) [CC BY 2.0], via Wikimedia Commons, for representational purposes.
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