Women and the importance of Financial Planning

Financial Planning helps people achieve their life goals. It guides one's life journey and helps them take complete control of their income, investments, and expenses.

Financial Planning is equal or even more important for women than men as it helps them to build a better standard of life, keeps them prepared for emergencies and makes them independent. Women play a major role in planning their family’s finances and helps achieve goals such as either to start a family, buy a house, raising children, their education, retirement planning, and various other events of life Let us discuss her role in preserving and expanding her family's finances here.

Importance of Financial Planning for women

Women tend to make conservative financial decisions, plan more for the future, and exhibit more Planning and patience in uplifting their families at stake. Women face a lot of hurdles when it comes to managing money. They are constantly juggling housework, office work, caring for their kids and family members, and also manage the household budget. She is lost somewhere between her chores and everyday hassles when considering their financial investment, saving for her retirement, and planning her financial goals.

Women should not ignore these issues, as a huge wealth gap exists between men and women in society. This wealth gap is perhaps created by the pay gap, and women spend a lot of time working for their families and concentrate less on investing and saving money. Hence it is very important for women to take financial planning seriously

Why should women focus on Financial Planning?

We live in a society where finances are still considered a matter of men. Still, it is high time that women get to handle money and take equal responsibility for Financial Planning.

One main reason women should focus on financial Planning is to enjoy complete rights and ownership over their hard-earned income. Though women have progressed tremendously over the years to being independent individuals, she still has a long way to go to attain the sense of authority that she aspires to, especially when taking control of their finances. Learning to plan & manage her finances either for herself or for her family would help her to be more confident in her life choices and improve her overall well-being. Every woman must generate her income for a stress-free life. Women are tagged as financially independent when they have a bank account and file returns, but that’s not enough they need to know and learn about how to manage their finances and create wealth for themselves.

There are also several advantages why women should be made to handle their families' finances; let us discuss them in detail here.

• Women are known to be more organized, detail-oriented, and also meticulous than men. They are also known to be perfectionists. Their great attention to detail also helps them be successful with money management.
• Women are also better investors and are cautious in handling money and are successful in trading money.
• Women tend to have a broader outlook on life and more long-term goals than men. Women tend to make conservative financial decisions and look more into the future, exhibiting more patience than men.
• Women not only plan the family's finances independently but also keep a record of their household and outside expenditures. It is said that it is in their motherly instinct to take solace in where and how to spend money.
• Women have innumerable inbuilt qualities that help them nurture their finances. Women are natural organizers and planners who work efficiently in managing finances. They have a keen eye for details and find opportunities for saving and investment. Moreover, women are more risk-averse than men and opt for better options for long-term financial goals.
• Research by the University of California highlights the importance of empowering women in Financial Planning and decision-making. They highlighted the necessity for financial advisors and planned to create more institutions for Financial Planning for women. The study addresses women's barriers and offers them mandatory resources and tools. With such progress, women have outperformed men in the investment market for over a decade.

Intelligent financial Planning by women will help women attain many financial goals such as saving money for buying a house, saving money for children's tuition, investing for retirement, etc.

Some below aspects can be added for women while financial planning (This does not seem to be edited one? All below points seems as it is, they are not being edited

1. Every woman should strive and works towards having an income for her own. She must generate some income whether active or passive income

2. They should have their individual Bank accounts, Investment accounts, should try and file their returns too depending on their income level.

3. Should ensure she is covered with proper Insurance coverage like Health insurance, personal accident, cancer cover, Critical illness covers etc.

4. Should be aware of her Inheritance rights and should ensure she is also benefitted from same. As women generally tend to overlook this aspect and lose out on their rightful inheritance and opportunity to create wealth in long run

5. It is very important of the women to be financial independent before they enter into any time of long-term commitment like marriage or planning to start a family. As being financially independent helps them to be more confident about their future and can plan in a better way

6. Should definitely consult a financial advisor before starting a financial journey

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Components of Financial Planning for women

Now that we know that financial Planning for women is important and that we have discussed how and why it is important for them let us now discuss the components of financial Planning for women. Financial Planning is inherent in the life of women and should be an aspect of their everyday life. The Six major components of financial Planning are as follows.

Setting up the financial goals of the family:

An individual's financial goals will determine what they want to achieve with their money. One can have short-term, mid-term, or long-term financial goals. These goals include traveling abroad, buying a house, or enjoying a lifestyle. The first component of a financial plan is a clear financial goal.

Identifying and having a clear baseline:

The second most important aspect of financial Planning is determining where one stands. Before crafting a financial plan, women should calculate their baseline net worth. They should also consider their liabilities and assets, which will help craft a clear baseline on where and when to start. When we say assets, it means the cumulative records of investments, valuables, bank accounts, real estate property, etc. Liabilities include loans, credit card debts, mortgages, etc.

Cash flow budgeting:

Budgeting the cash flow focuses on what one currently does with their money, such as where they spend their money, how they plan their lifestyle, etc. Budgeting the cash flow helps the women to allocate funds, create clear estimates, plan for inflation, and devise strategies for the next ten or fifteen years.

Retirement Plan:

According to research evidence, women tend to live a longer life than most men. Thus, they also have to plan to live without a salary. Retirement planning is thus an important component of Financial Planning for women, and to enjoy a good retirement life, women must plan their finances today.

Risk Management):

Ensuring finances are not impacted in case of any medical emergencies. Must haves are health cover, Cancer cover, and Personal accident cover and if she is an equal contributor to the household income or has a loan to repay in which she is a joint borrower, then Life insurance is a must

Planning for Emergencies

Emergencies can strike the life of an individual at any time. While planning emergency finances, women should plan for at least 12 months of income-less existence. Ideally, this money should be invested in liquid assets, so they will be easy to access. (Post covid it is advisable to have a contingency fund for 12 months)

Women should craft their financial plans by keeping these components in mind. It gives them a meticulous approach to Planning and not relying on others for their financial needs.

Bottom Line

Women at different stages of their life, from adolescents to working women, married women, mothers, or homemakers, should take financial Planning seriously. Financial planning helps women take control of finances and plan for long-term goals. This also helps them enjoy a very high standard of living and manage unexpected and unwanted expenses. They can take help from personal financial planners to manage their expenses and benefit from the practical advice they offer based on their knowledge and expertise.

A financial plan is your roadmap for creating the life you want. It will help you to achieve your goals and to thrive as the person you want to be. Financial Planning helps women achieve the freedom in the life she is entitled to.