Gone are the days when women preferred saving money over investing it. A survey conducted among 3700-odd women within the age bracket of 23 to 76 years by FinEdge has found a 42% increase in the number of women investors. They save 5% more for future goals than men. The survey also found that 30.82% of women are planning their retirement.
Some of the popular investment options include mutual funds, stocks through SIPs, gold bonds, gold itself, government schemes, and even real estate.
Importance of financial literacy for independence
Keeping an eye on this trend and seeing the immense impact of goal-based investing on her life, our Technical Program Manager, Poornima Sulur Tamilmani, conducted a session on financial planning for our Girl Power group.
“Until the end of my twenties, I was spending everything I earned. I even had some loans,” recollected Poornima. “As I approached my thirties, I realized I had little to show for nearly eight years of work,” she added. “It was only when I turned 30 that I started watching some YouTube videos.”
She watched YouTube videos by entrepreneur Ankur Warikoo and management consultant Akshat Shrivastava. “I also read the book ‘Make Epic Money’ by Ankur Warikoo. Once I began investing, I began feeling truly financially independent,” said Poornima. “And that is exactly how I want every one of us girls in the company to feel. The freedom to make decisions without depending on their spouses or parents,” she added.
Goal Setting and Financial Planning
The session began with each of the 30-odd participants making a list of their financial goals. While some participants aimed to buy a home or retirement property, others focused on goals such as vacations. Participants were then instructed to categorize their goals into short-term, mid-term, and long-term objectives.
So, we realized that buying a particular piece of jewellery, a car, paying your child’s school fees, or saving for an event coming up in several years were short-term goals, while saving up to buy a home would probably be a mid-term goal. Long-term goals would include probably children’s higher education, a holiday home, and retirement – recollected People and Culture Specialist Jessintha Johnson.
How do you know if you are saving enough?
Once goals were set and categorized, the next step was to assess if we were saving enough. “We learned that according to most financial experts, the ideal ratio is 50:30:20 for the first 10 years. This includes spending 50% of your income, setting aside 30% for short-term goals like a new car, current home, vacations, etc., and 20% for mid and long-term goals,” said Associate Product Marketer Sheebha Austin.
Participants were informed that after the initial 10 years of saving, the ratio should be reversed in the following decade. Where you spend only 20 % of your earnings, save 30% on short-term goals, and 50% on mid and long-term goals. Participants also learned about various investment tools, the trade-off between rate of return and rate of risk, and the suitability of different tools for mid-term and long-term goals.
Financial Safety Nets: Emergency Funds and Insurance
A few free online apps were also shared where people could track their goals and their current status. To highlight the importance of creating emergency funds and taking up crucial insurance policies, the audience was made to form groups and list six life events. The event’s participants came up with included unemployment, identity threats, natural disasters, medical emergencies, and of course, coming into a windfall inheritance.
Starting Early for Financial Independence
After group discussions, it was agreed that we would need to set aside 3-6 months’ worth of living expenses and take out health insurance and term insurance. To conclude the session, Poornima spoke about why it was crucial to start early. The earlier you start saving, the longer your money can work for you, and the bigger your compound earning becomes, she explained. “We women should be able to manage finances for our whole family and set our own goals,” she added, signing off.
