5 Tips to Urban Women for Successful Financial Planning
Financial problems will not distinguish between a man and a woman. Therefore, all must be aware of financial planning. Urban women who are starting their careers need to have a well defined financial plan to cater to emergencies. They should have a proper budget, a good investment account and savings insurance to help deal with the uncertainties.
Here are some good financial planning tips for women.
Goal setting: One of the major necessities for financial planning is to set goals that you want to achieve. If you are a woman who has a well-defined goal, then you can start allocating money in a particular way to achieve them. You also need to define the tenure within which you want to accumulate the amount.
The goals can be anything. For single women, planning for travel plans and buying gifts for themselves and their loved ones can be major goals. Women who have a family of their own want to start accumulating savings and investments for the children’s education and marriage. Of course, the goals are not limited and can be anything you want. But these goals will bring in the much-needed clarity to start budgeting and allocating finances.
Your goals will also help you manage your debts. You can set the targets and period within which you want to pay back your loans and become debt-free. A debt-free lifestyle will encourage you to invest more money in other financial instruments. After your debt is paid off, you can make your money work for you to achieve your goals.
Preparing the action plan: After you have laid down your goals, the next step is to prepare a plan. Firstly, you will need to track all your expenses and current income. Then you will have to estimate the projected income and expenses shortly. This will allow you to save and invest accordingly. For example, if you do not need the money in the next few years, then you can put the money in a savings plan that guarantees1 returns on your investment.
You must remember, the more you save, the more you can earn in the future. A proper financial plan will help you cut down on unnecessary expenses and will allow saving more. If you are prone to impulsive shopping sprees, then this is the time.
Few other factors such as investment tenure, investment type and risk appetite will also govern your financial plan. You should also prepare an emergency fund for contingencies.
Investing: An idle savings account will only lead to financial distress. The rate of returns on a conventional savings account is extremely low. The only way to grow your money is through investing. Investing will allow you to create an economic moat between unpredictable financial events.
There are multiple asset classes with varying levels of risk to reward ratio where you can invest your money. If you are risk-averse, then fixed deposits and regular income plans are your best friend. They will generate a constant stream of revenue every year. If you are a risk lover, you can invest in mutual funds or make direct transactions in the equity market. For a risk-neutral capacity, you can go for an insurance policy that provides life coverage and also invests money in the market on your behalf.
The economy has multiple such instruments for all kinds of different wants. This will allow you to invest according to your risk appetite and expectations. Choose what suits you the best.
Insurance policy: An insurance policy is like the screw that bolts your financial plan into place. An insurance policy will safeguard against the uncertain future. If you have just started earning, then you should first invest money in a good policy. Life insurance or term life insurance are crucial as they provide a layer of protection to your financial requirements.
Nowadays, insurance plans have become versatile. They come in many different forms to fit into anyone’s lifestyle. Term plans are the purest form of life insurance that only provides death benefits to the family. At times, they also provide critical illness benefits if you are diagnosed with a life-threatening illness. There are regular income plans as well that will guarantee1 the return in regular intervals. Some insurance policies will invest the premium paid to them to invest in the market and provide you with much higher returns.
Tax planning: Tax* planning and financial planning go hand in hand. The more money you save from tax* planning, the more you can invest in growing your capital. Through investments and deductions, you could save a lot of money.
Schemes like Provident Funds (PF), Equity Linked Saving Scheme (ELSS) and Unit Linked Insurance Policy (ULIPs) will invest your money as well as offer deductions on investment. You can avail of deductions up to ₹1,50,000 under Section 80C of the Income Tax Laws. If you pay a premium for health-based riders# or a health policy, you can also benefit from Section 80D of the Act. The deduction, however, will depend on your age.
The death claim that your beneficiary will receive is also tax-free* under Section 10(10D).
Tata AIA Life Insurance Regular Income Plans
Tata AIA Life offers a variety of regular income plans that you can choose from. One such plan you can consider is the Tata AIA Life Insurance Fortune Guarantee Plus (UIN: 110N158V01). The plan is flexible, allowing you to choose between regular income and regular income with built-in critical illness benefits. You can also choose the income period between 20 to 45 years. The plan also guarantees1 the return of benefit after the end of the income period. Tata AIA online payment option makes it easier for you to pay your premiums.
Whether you want to go to an ivy league institution or buy jewellery you have in your online cart, financial planning will get you closer to it. Financial planning for women is, therefore, necessary to lead a truly financially independent life.