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Financial planning strengthens single women to overcome their unique challenges, secure their financial future, accomplish their financial goals, and become independent. However, choosing the best investment plans and working on the right investment strategy are crucial.
Financial planning is the key to independence and unique aspirations for a single woman. It helps her identify her financial goals and secure funds to accomplish them in the long-term.
While there are different investment plans for the varied categories of investors, choosing the best options and getting the investment strategy right is important to reach your monetary goals.
This blog will explore financial planning for single women, delving into why it is crucial. It will also provide you with a step-by-step guide on preparing a tailor-made financial plan!
Why Is Financial Planning Important For Single Women?
Financial planning is of utmost importance for single women, for they face unique challenges that can extend to different stages in their lives. These challenges can be summed up as:
- Income disparities - Although women have started breaking the stereotypes prevailing in India for centuries now, they earn comparatively less, on average, than men managing a family due to gender-based pay gaps. Therefore, women must work on their financial plans to utilise their income wisely to ensure financial security.
- Societal norms - The traditional Indian culture and societal norms can place undue pressure on single women, demoralising them from managing their finances. Neglecting this social stigma and paving the way for financial independence is crucial to securing finances for themselves and their dependent family members.
How To Create A Financial Plan For Single Women?
Determine Financial Goals
Every single woman will have distinct financial goals for their future. It will depend on their professional and family financial commitments.
Financial planning goals can be determined based on the following aspects.
Career prospects
- To progress professionally, women must secure funds to accomplish their career goals, such as pursuing higher education, taking certification courses, etc.
Family financial commitments
- Family financial goals such as education and marriage expenses for dependent children, routine expenses for dependent parents, purchasing a new house, etc., are crucial for consideration.
Retirement planning
- Retirement is the last phase in life and might not seem very important for the current life scenario. However, planning for the required finances, considering daily life expenses, unexpected medical emergencies, etc., will help single women lead a financially independent life during their golden years after retirement.
Debts
- While planning for their future money goals, availing of financial support through loans can increase their liability. Repaying them should also be an evident financial goal and has to be incorporated into the financial planning initiatives.
Life insurance needs
- Single women with dependent children and parents must ensure their lives are insured to safeguard their families from financial inconsistencies in their absence. Hence, purchasing a life insurance plan for the long term should be a definite goal.
Determine the Required Funds
As future money goals are identified, it is time to determine the funds required to accomplish them over the long term. While determining the funds required, it is crucial to consider the timelines and the inflation rate.
For example, if purchasing a new house is a goal, women need to figure out when they need to purchase it and the applicable inflation rate to determine the most approximate funds requirement.
Determine the Investment Strategy
Now that the financial goals and the funds required are identified, it is time to work on the investment strategy.
The following steps can help identify the right strategy for the investment plans.
- Analysing the risk appetite - Single women need to analyse their risk appetite based on age, life stage, current financial condition, and future financial goals to determine their comfort zone for investment plans. The risk spectrum can range from 'safe' with no or less risk to 'high risk' volatile investments.
- Asset allocation - Based on the risk appetite, whether low, medium, or high-risk tolerance, consider the wide-ranging options for investment plans and work on the asset allocation.
Single women can determine the most appropriate mix of investment options and diversify their portfolios, considering their financial requirements. They can choose between options such as high-risk equity investments2, low-risk money market funds, tax*-saving schemes such as the Public Provident Fund, National Savings Certificate, Equity Linked Savings Scheme, etc.
They can also consider tailor-made solutions such as ULIP^ plans that provide a life cover and the option to invest in the financial market based on the risk appetite.
Create a Budget
Now that the financial requirements are identified, and the investment strategy is defined, single women need to work on a budget to allocate funds regularly for these long-term investment plans.
To create a budget, allocate funds separately for the following expenses:
- Routine grocery needs
- Clothing
- Medicine
- Transportation
- Communication
- Entertainment
- Vacation
- Investment plans
Based on the needs of the investment plans, the funds allocated for the other requirements have to be revised.
Secure Funds for Emergency Needs
While crafting the budget, setting separate funds for emergency needs is one of the most important money-saving tips for single women. It helps manage unprecedented scenarios when all the funds are locked on long-term investments and avoid breaking savings funds.
Review the investment plans
Although investing for the long term is the key strategy, revising it based on changing life conditions and requirements can make the investment strategy and asset allocation more productive.
Conclusion
Financial planning for single women is a choice but a necessity for a single woman. It is the right and only way to empower them to take control of their financial aspirations and commitments. It will help them identify their financial goals, make strategic investments, and plan for safeguarding themselves and their family against unprecedented scenarios. Smart financial planning with determination can help them lead a life with independence in this fast-paced global world!
