In a special seminar, “Savvy Saving for Smart Women” organised by Moneylife Foundation and supported by DSP BlackRock’s Winvestor initiative, to celebrate International Women’s Day in Mumbai, financial planner Nisreen Mamaji told a packed audience that, “Every woman need to understand importance of saving and must save at least 20% of her income in right product to beat inflation and also have a contingency plan in place.”
“Financial planning sounds scary for many women and they end up handing over this important aspect either to their father, husband or brother. However, there is nothing to fear about money and financial planning and women turn out to be better financial planners than men,” argued , Ms Mamaji, founder, manager and chief planner of Moneyworks Financial Advisors.
Ms Mamaji pointed out in simple terms many reasons why one should invest regularly. Right from starting their careers women can start planning financially for other future goals such as marriage, buying a car, buying a house, children’s education, retirement etc. With today’s rising inflation, it is essential to start planning early to meet different goals. All that requires regular savings and investing.
“All individuals have a finite period to save for their investment goals,” says Ms Mamaji. Starting at age 25, when one is young and independent, one’s expenditure tends to be more than her savings. Slowly as the career progresses and income increases, savings also should increase. During this period it is crucial to save as much as possible. She explained how women in different situations should plan their finances.
Single Woman: Single women should save a minimum of 20% of their income. Considering they have time on their hands, they should invest in growth assets like equities and equity mutual funds. Care should also be taken to create a contingency fund for an emergency. Considering the high cost of healthcare, one should opt for a medical cover as well. Though one may be tempted to spend on their credit card, single women should try and avoid credit card debt. And finally they should empower themselves with financial knowledge.
Married Woman: Even married women must maintain a separate bank account and should participate in all financial decisions. Even while financial investments are being made, they should educate themselves about various products and investments. They should also be aware of locker keys, statements, passwords and online access points.
Divorced Women/ Widowed women: Divorced women and windowed women should update their bank accounts and insurance policies in their single name. They should make nominations and wills in favour of loved ones and pay off loans ASAP. They need to take health and life cover and invest in a retirement plan.
Contingency planning: Emergencies like accident, death, loss of job, loss in business, medical conditions, etc can strike anyone at anytime. The general rule is that it should be at least equal to six months’ expenses. One has to ensure that the fund earns a good rate of interest along with high liquidity.
Medical Emergency Planning: “Do you think your cover is enough given the double-digit health inflation? If you feel it’s not, you can buy a separate policy or increase the cover by opting for a top-up insurance plan. The latter is cheaper and more viable,” said Ms Mamaji.
If you have Rs5 lakh cover and want to increase it to Rs10 lakh, you can;
1. Buy a separate health policy, which will cost around Rs6,000 a year, or
2. Opt for a top-up plan, which will cost just Rs2,000 a year.
Retirement Planning: When it comes to retirement planning, one should be aware that life expectancy has increased. Retirement is a lot different now than it was around 30 years back, she said. It is no more complex to earn a steady income as bank interest rates are market linked and volatile. We even have growing aspirations to maintain pre-retirement standard of living, this also needs to be factored in said Ms Mamaji. One has to save a lot throughout the entire earning years in the right products to ensure this.
The session ended with questions and answers from an eager audience.