We have been witnessing a surge in younger women joining the workforce. Not only are they becoming more successful at workplace, but they are also taking proactive steps towards financial independence. Hence, this transition also brings a new set of financial responsibilities and opportunities. By embracing sound principles of personal finance and investing early on, young women can build a strong foundation for long-term financial success. Here are some key financial tips to help navigate this exciting phase effectively.
- Empowered Decision Making: The first step towards young women achieving their dreams is to be empowered to take independent financial decisions. Building a strong knowledge base and financial awareness paves the way for this. Empowered decisions lead to a more proactive approach, allowing you to take control of your financial future.
- Create a Budget : Understanding your income is the first step towards your budgeting exercise. Take note of your salary, including any deductions at source that could include taxes, insurance and retirement contributions. List down all your essential expenses that are recurring in nature. This could include rent, utilities, groceries, transportation etc. With a clear picture of your income and expenses, you can create a budget and also get clarity on the surplus that can be directed towards savings.
- Invest for your future : The social fabric in India is transforming at a rapid pace with women at the helm of positions in the private and government sector. This has also brought in change in women being single or marrying late in life. This makes it imperative for young women to invest for their future and become financially independent. Young women must get into the habit of saving for goals early on. Engaging an investment expert at this stage would be of great advantage, as an expert can co-create an investment roadmap that could help in achieving goals, making informed decisions and optimizing returns.
- Financial Goals : Keep an eye on goals that you would want to achieve. Your goals serve as the compass guiding you towards securing your financial future. You could start with Retirement as a goal as it is a universal goal and applies to everyone. Make sure you take into account the impact of any financial decision on your goals.
- Automate Your Savings: Automated savings are an effortless way of investing. Set up an SIP account into a Mutual fund based on your goals and careful assessment by an expert. By automating your investments, you tend to prioritise your savings and willingly subscribe to the philosophy of ‘Save first, spend later’. Also, ensure that your Savings to Surplus ratio is above 75% which means that you invest a significant percentage of your monthly surplus towards your financial goals
- Start Small but Start Early: It is important to not get overwhelmed by the amount needed to invest for your goals. Your monthly investments should remain reasonable and a step up plan should be employed on to them. For example an SIP of Rs. 5,000 per month with a step up of 10% every year can create a corpus of approx. 45 lacs* over 15 years. The important thing out here is to be disciplined and remain consistent.
- Prioritize Debt Management : Early on in your career, if you have student loans or other debts, creating a strategy for repayment is essential. Also, be mindful of debt traps that one can fall into early in their careers. Revolving debt on credit cards or taking personal loans for short term needs can be akin to having holes in a boat, it may provide temporary relief, but can lead to high financial outflow in the long run.
- Have an Investment Expert by your side: The chances of investing success increases exponentially when you have an investing expert who guides you through the ups and downs of your investing journey. Make sure that you align yourself with an expert who would be able to help you navigate through times of uncertainty and keep you focused on your goals. By leveraging their knowledge and experience, an expert can help you develop a customised investment roadmap and navigate through complexities of financial markets, ultimately enhancing your ability to achieve long-term financial goals.
The author is the Co-founder and CEO, FinEdge
