Personal Financial Planning For Women To Build Financial Independence

Personal Financial Planning For Women To Build Financial Independence
SHEROES Work From Home Opportunities

Women should be financially independent! These expert tips on personal financial planning for women will help build financial independence for women in India.

Money! We all need it and want more of it. At SHEROES, facilitating financial independence for women is very important to us.

We believe that women should be financially independent, so on the SHEROES app, we provide expert financial advice and financial guidance with the aim of building female financial independence in India.

We got women and financial planning experts – like Mrin Agarwal, Dipika Jaikishan, Shwetha Bharathwaj and Shipra Baranwal – together to discuss personal financial planning and financial management topics in the Mahila Money community.

These sessions helped SHEROES app users get free financial planning advice on their personal money management issues, like saving and investment tips, and advice for managing debt wisely.

As Mrin Agarwal, Founder of FinsafeIndia, Co-founder of Womantra and a licensed financial advisor, financial coach, and personal finance columnist, says:

“It is important for women to generate income and ensure they invest this for their future. Further, it is important to be involved in money management and for this, they need to talk about investments with their spouse.”

SHEROES Champion, Dipika Jaikishan, is on a mission to make every woman in India financially independent. She says:

“Money is an enabler of most things in our lives, Without money, all our life goals would just remain dreams. This is why I’ve dedicated my life to helping people figure out how to be financially sound and financially healthy.

Women specifically, tend to leave their money decisions to other people: usually a spouse, or a parent. However, women live longer than men, have higher healthcare costs and have non-traditional career paths, hence their financial paths and money situations are quite different from those of men.

What I’ve loved about working with women on their finances is that they care about the long term, and don’t invest in things they don’t understand.”

Shwetha Bharathwaj is the Founder & CEO of HerAlpha and a SEBI-Registered Investment Adviser with over 13 yrs of experience in the BFSI.

Shipra Baranwal is Co-founder of LiveFromALounge and also runs the PointsPurse community where she runs personal finance and credit card workshops exclusively for women.

Mahila Bank


What Is Financial Planning?

Financial planning is the process of creating a financial plan to guide your financial decisions and help you meet your life goals.

Financial and investment planning gives you financial control of your income, expenses, and investments and helps you manage your money wisely so you can plan for the future.

Sometimes referred to as an investment plan, a financial plan can focus on other specific areas of personal finance such as risk management, estates, college, or retirement.

To help you learn how to make a financial plan for your goals and manage your money better, here’s a roundup of the best financial advice from our experts on basic financial planning for beginners.

Expert Tips To Save Money

This list of tips to save money includes some of the best money-saving ideas and brilliant ways to save money and invest it wisely. Create a money-saving plan with these money-saving tips from our personal financial advisors on SHEROES.

1. Start small and increase your savings slowly

Make a financial budget and follow it. Keep an expense tracker to keep track of your expenses. On analysis of your financial expense tracker, you’ll get an idea of where you spend the most on non-essential expenses.

If you have personal debt or personal loans to pay off, it is always better to pay off both the loan and interest. If you’re short of funds, it’s better to pay off the interest first and then pay the loan later when you have the funds. As Dipika says:

If you’re just starting to earn, start by saving just ONE day’s worth of your income. Slowly increase that to 10%, then 20% and finally 30%. I.e., if you are earning let’s say 60,000 a month, you should be saving 18,000.

Let’s assume I want to take a holiday after 24 months and need 2 Lakhs for it, I want to know how much I need to start investing now. I also need to consider inflation, which means what is worth 2 lakhs today will be 2.26 lakhs after 24 months.

This means it has gotten more expensive by ₹26,000. I want to take a conservative risk so I will need to invest ₹9,000 every month. This can be applied for any goals – education, travel, retirement, emergency fund etc.

She also offers the tips below to start saving money:

  • Save before you spend. Put away your savings as soon as you receive your income.
  • Start by saving 1 day worth of income, and slowly work up to 20% of your income.
  • Start with SIPs so your savings get invested automatically at the beginning of every month.

2. Is the 50-30-20 rule the best saving plan?

What is the 50-30-20 rule and does it really help in saving money monthly? The 50-30-20 rule of budgeting is one of the methods of saving money that recommends splitting up your monthly income as follows:

  • 20% of your income for savings
  • 50% of your income for important and necessary expenses
  • 30% of your income for important but optional expenses

“Start by empowering yourself with knowledge, says Dipika. Without knowing the basics, investing can be overwhelming.” She offers 3 steps you should follow for investing every month:

  • Keep aside 10 to 20% of your salary as soon as you receive it, so within the first week of every month. Work this up to 30%.
  • Create a SIP (or multiple SIPs!) for those savings so you are ensuring the money is growing.
  • Continue this discipline month on month.

Personal financial advisor, Mrin Agarwal, prefers a 30-30-40 rule, with 40% kept aside for savings and investment is the best saving plan. “It works provided you follow it in a disciplined manner,” she says.

financial independence for women

Goal-Based Financial Planning For Women

Personal investment planning involves using your investments to meet your financial goals and objectives. To invest money, you need to first create a financial plan so that you know how much to save for your goals.

Then based on your risk tolerance, choose the right instruments for your financial investment planning needs. Risk tolerance is different for everyone and is defined as the percentage of money which is at a capital risk and based on the amount of money you can comfortably lose.

Goal-based financial planning in your 20s is very different from financial planning in your 30s or financial planning for senior citizens because your financial goals will change at different stages of life.

In your 20s you may not be married and won’t have to create a financial plan that includes your spouse and kids, while in your 30s and 40s you will have to include them in your plans.

The safest investment options are the guaranteed return options backed by Govt of India like Employee Provident Fund (EPF), Public Provident Fund (PPF), Post Office schemes etc.

Fixed Deposits (FDs) are also pretty safe if the bank is chosen carefully. FD’s are different for different banks. The interest rates offered also differ from bank to bank.

Check the financial health of the bank before you park your money. The NPS of the bank should not be more than 10% and the capital adequacy ratio should be more than 12%. You can get these values by searching on Google.

For long term goals (10 to 15 years) you could invest in Equity mutual funds, PPF, NPS. For short term goals (3 to 5 years), you could look at investing in a short term debt fund or Fixed Deposits.

1. Financial planning for salaried employees & strategies for tax savings

According to our experts, the best financial planning for salaried employees would be to invest 40% of your salary and, based on your risk-taking ability, put that in mutual funds and PPFs.

A moderate-risk investor could look at a combination of Public Provident Fund (PPF), equity mutual funds (multi-cap funds) for long-term and short-term debt mutual funds or FD’s (for the short term).

Good tax planning can help you save your money. As Mrin says, “It is important to know about tax planning. In case you’re working, your Employee Provident Fund (EPF) would make up for your tax saving under Sec 80C. and help you get deductions of up to ₹1.5 lakhs in a financial year.”

Aggressive investors can invest in ELSS mutual funds and avail the dual benefit of tax saving and growth. You can invest up to ₹1.5 lakhs and get a deduction under Sec 80C in the old tax regime.

Other Sec 80C investment options include EPF, VPF, PPF. Also, repayment of the principal amount towards your home loan qualifies for deductions under Sec 80C.

You can use the calculator on the income tax website to calculate your taxes approximately and also help you choose whether you should opt for the old or new tax regime for Income Tax Filing.

Start your tax savings at the beginning of the financial year as you earn interest on those extra months. Stay away from insurance products that promise you growth on your money. Those are commission-based investments and over the long term, the returns are also very low.

There are options like 5-year Fixed Deposits (FDs) and National Savings Certificates (NSCs). However, if you know you are willing to keep aside your money for 5 years, you can invest in a tax-saving mutual fund called Equity Linked Saving Scheme (ELSS).

These funds have the shortest lock-in period of 3 years within the tax-saving investments category. They also give you good growth in your money over a period of time.

So should you invest in PPF or ELSS funds to save tax? You can consider a combination of the two. “I personally do both but I do a much larger amount for tax savings in ELSS as I am keener on high growth in the long term,” says Dipika.

She also offers the tax-saving tips below for comparison:

  • PPF is a long-term investment and your money is locked for 15 years. It is currently at 7.9% interest annually and this is changed by the government every quarter.
  • ELSS is an equity mutual fund with a 3-year lock-in and higher chances to grow. Of course, there will be some volatility in the market that you need to be comfortable with.

tips to save money

2. Building an emergency corpus

In her session on Emergency & Insurance Planning, Shwetha Bharathwaj offered the following tips on saving money for emergencies by building an emergency corpus.

  • The ideal emergency corpus for a single salaried person with no dependents would be 3 months of living expenses or take-home pay.
  • For a family with kids – where both husband and wife are salaried – it would be 6 months of your living expenses or the highest take-home pay of husband or wife.
  • For a family with kids and a self-employed husband and wife, it would be 9 months of your living expenses.

An ideal contribution to emergency planning would be 4 to 6% of your monthly income. Keep building your emergency fund if you already have one. If not, now is the time to start building one.

Make a budget every month and stick to the budget. Document your expenses to know your spending pattern and improve subsequently.

Invest into your emergency corpus every month without fail by investing your savings across various financial products like SB accounts, Short term FD and Liquid Mutual Funds.

However, the first step would be to determine the right amount for you. Once you have built your emergency corpus, you have to keep monitoring it and adding to it based on your changing needs.

Cashify your extra gadgets and invest in your emergency corpus. That means selling all the extra things you have and convert them into cash to invest in for emergencies.

The most important thing when it comes to short-term investments is to be mindful that you might need it at short notice so it should be highly liquid and accessible.

Even if these investments earn you a low amount of interest that’s okay. You can consider investing in liquid mutual funds for this purpose. Short-Term MF schemes, Ultra Short-Duration MF schemes, Short-Term FDs are some of the options that you can try.

Fixed de[psits have a lock-in period of the number of days/months/years you choose while depositing your amount. Liquid Mutual Funds now have an exit load of 7 days, which means if you redeem your investment within 7 days from the purchase of the liquid mutual fund, you will be levied charges.

You can pause your contributions to other goals for few months to build up emergency funds. Unless you have an emergency, don’t take money out of your equity MF.  If you really have an emergency in hand, then you can withdraw other investments based on your need.

For example, you may have to spend approx 7 to 10 lakhs in private hospitals for COVID-19 treatment depending upon the severity of your illness. So 7 to 8 lakhs of health insurance cover would be good, but you have to take into consideration other pre-existing health conditions as well.

IRDAI as a regulator has been very proactive and pro-customer. It has mandated insurance companies to give top priority to COVID insurance claims and honour COVID-19 claims as a part of the health insurance policy. COVID-19 riders are also available. But do check with your insurance service provider.

Anyone with a good emergency corpus, life insurance and health insurance is good to sail thru these troubled times. For those of us who don’t have an emergency corpus, now is the time to start building one.

The right product for creating an emergency corpus would be a combination of savings account, FD, and Liquid MF. Investment in shares will not give you liquidity and will not serve the purpose.

There is no lock-in for deposits into Savings accounts. Download the HerAlpha app from the Google play store to start your emergency planning journey.

3. How to save money for your child’s education

“Most children’s education plans seem to be for a college fund. But school fees are also high these days. How to invest in both of these? That is a great question,” says Dipika.

I hear school fees are really high these days and it is at times hard to manage this. Let’s take for example you need to pay for next year’s fee in April 2020 and the amount is ₹80,000 per year.

You’ll need to start saving ₹12,000 per month approx starting now to get to that number. I think it is important to break down school fees year on year and see how much you need to save every month or what lump-sum amounts you need to get to that number.

School fees also get more expensive by over 10% every month and it is important to keep up with that inflation. Regarding financially planning for kids, I would treat it like any other financial goal, perhaps a set of multiple financial goals.

Calculate the amount you need for education, living expenses and others expenses, and factor in inflation to ensure you’re making the right investments for your child’s future.

“Also, secure yourself with a term insurance plan to protect your child in case of your death. Look at investing in PPF or equity mutual funds. Consider the Sukanya Samriddhi Yojana for a girl child,” says Mrin.

It’s also very important to teach children early on about the value of money and inculcate a savings habit. Children emulate their parents and it is up to us to set an example for kids. Do not give in to all their demands and let them realise what you can afford and what is an unnecessary expenditure.

If you’re saving for overseas education for a goal that is 3 to 4 years away, you can look to invest your money into Short-Term Debt mutual funds. Check out Mrin’s video on the best investment options for 3 to 5 years.


4. How to save money for your marriage

If your marriage goal is just 2 to 3 years away, equity mutual funds would not work for you. You could look at parking your money in fixed or recurring deposits and low-duration debt mutual funds. Choose a debt fund carefully and ensure it has a portfolio of high rated (AAA) papers.

5. Financial planning for housewives

Any investment plan must be made with a goal and a time frame for the same in mind. If you need the money back in say 3 to 6 months, no point parking the same in an equity mutual fund.

If you’re looking at equity mutual funds, do not look to park your investments for less than 5 years. Mutual fund investment returns are not guaranteed. So take a call based on your risk appetite, time horizon etc.

6. Financial planning for single women/widows

The best tip for financial planning for a single woman or widow is to invest in SIP in equity mutual funds. The returns are market-linked, so can’t predict returns, but if you stay invested for a long time, you could get good returns. A recurring SIP is also a good option and you could always invest in more than one instrument.

7. Retirement financial planning

Want retirement financial planning tips for seniors? These retirement investments options will help you build a retirement corpus so you can feel supported and secure in your golden years.

A good way to calculate your retirement corpus is to see how much you spend today. For instance, my current expenses are ₹80k a month and if someone were to ask me how much will be enough for me every month if I could retire today I would ₹1 Lakh a month.

You need to then see in the year that you want to retire what will that 12 Lakh a year be. You will need to consider the effect of inflation and see this number grow. The best way to plan for retirement is to start investing as early as possible.

If you’re working, you would be receiving Employee Provident Fund (EPF). Do not withdraw the EPF corpus as you need to use it for your retired life. You can also invest in the Public Provident Fund (PPF) and National Pension Scheme (NPS).

For those employed in private sector jobs, your Employees Provident Fund (EPF), or Provident Fund is the biggest investment for your retirement. Try not to withdraw from your EPF and keep that for your retirement.

retirement financial planning

You could also invest in PPF or equity mutual funds for your retirement. You could look at putting in some extra towards the same as Voluntary Provident Fund (VPF). Senior citizens can look at the Senior Citizens Savings Scheme or Post Office Monthly Income Scheme or Recurring Deposits.

If your retirement is more than 10 years away and you can take risks, look to invest into equity mutual funds and stay invested for more than 10 years. Then move to a debt fund when you are 3 to 4 years away from retirement.

Equity mutual funds yield better returns if held for a long time. But you need to be ready to take risks associated with investment into equity mutual funds. For students who can easily invest for more than 10 years, we recommend a mix of multi-cap and mid-cap funds.

Also, keep in mind the rate of inflation, so if you think you need 30 lakhs for retirement after 30 years, you would actually need 2 crores 28 lakhs. You can use the Dreams calculator to check the future value of your goals.

If you plan to retire at 55 or 60 and have a good 19 to 25 years ahead of you to grow your money, you could consider investing and building savings in mutual funds for the long term.

There are many MF schemes offered by top Mutual Fund houses exclusively for retirement planning. You can look at investing in them based on your risk appetite.

For strategic financial planning for senior citizens, you can also choose to invest in Hybrid funds like the Balanced Advantage Funds or Dynamic Asset allocation Fund.

Your SIP amount will depend on your retirement corpus and how much you can set aside for the purpose of retirement. What happens here is that your money compounds considerably for your future.

Although PPF gives a reasonably good return it does not match how things are getting expensive, so slowly start small investments into your retirement corpus through mutual funds.

When considering your retirement goals, you could also look at a systematic withdrawal plan for a regular stream of income post-retirement.

7 Investment Planning Options To Build Wealth

Learn the best way to save money for the future with these tips on investment planning for women. Get the best financial planning advice on the best investment options to help you meet your financial goals.

1. Investing in NPS Vs PPF

Public Provident Fund (PPF) and National Pension Scheme (NPS) are good options for retirement planning.

For the best pension option, you can choose the NPS auto-choice option and choose an aggressive or moderate option. At the age of 60, 40% needs to be put into the pension fund and you will get a pension. Watch the video here for more information.


Public Provident Fund (PPF) gives guaranteed returns whereas National Pension Scheme (NPS) is a market-linked product and gives returns based on the allocation to asset classes chosen.

As NPS does not give fixed or guaranteed returns you don’t know the amount you would have at retirement. You can make partial withdrawals from the NPS corpus for specified purposes like children’s higher education, child’s marriage, or for the treatment of certain illnesses.

However, you can exit from NPS only after the completion of 10 years. In case of premature exit of a subscriber from NPS, the lump sum withdrawal (20%) is taxable as per the applicable slab rate in the year of withdrawal.

The remaining 80% of the corpus has to be mandatorily converted into annuities and is taxable as per the slab rate of the annuitant in the year of payout.

PPF gives a lump-sum amount at end of the term, whereas in NPS, you get a certain amount as a lump sum and the rest is invested into an annuity scheme and you get a regular pension.

For PPF investment at 60,000 per year, the amount at the end of 30 years would be ₹16 lakhs, 27 thousand, assuming 7.1% returns.

However, the returns on PPF also change every quarter and hence you can’t predict the exact amount. Also, PPF has a lock-in period of 15 years whereas NPS is locked in till the age of 60.

2. Investing in post office savings schemes

In the post office, there are savings accounts and time deposits. The PO time deposits are similar to fixed deposits. The only difference is PO time deposits are backed by Govt guarantee and interest rates also are a little higher than FD’s.

But monthly, quarterly, half-yearly interest payouts are not possible in PO time deposits. Hence, these schemes would not suit those who are looking for regular income.

3. Investing in fixed deposits

In her session on How to be a smart money manager, Dipika gave the following advice on investing in Fixed Deposits.

All FDs are fetching poor interest rates these days. Depositors across the board are feeling the pinch as banks trim their savings deposit rates.

But the bigger issue is that once banks cut rates on savings deposits, they may not hike them again, going by past trends. Hence, you may be stuck with these lower rates for a long while.

In case you were going to consider investing in an FD for 3 or 5 years it may be wise to consider a combination of mutual funds. A simple way of doing this is defining how long you want to invest and what is your risk-taking capacity. There are options for investment within mutual funds for all needs.

mutual fund investments

4. Investing in mutual funds

With little or no experience in the financial markets, it is advisable to start with mutual funds as not only the risk is comparatively less, but also because an expert makes the decisions.

Understand what mutual funds are, types of mutual funds, regular plans, direct plans, etc. Then you can either approach your investment banker or any investment advisor (if you have any already) if you want to go for the regular option.

When the markets are low, the Net Asset Value of the funds will be lower and you’ll be allotted more units for your investment amount. When markets are high, NAV’s would be higher.

Whenever you have 7+ years to go for your goal, invest in an equity mutual fund. When you’re closer to your goal – like 3 years away – move the amount into a debt mutual fund.

You can invest in mutual funds anytime. The earlier you start the better. You can either make a lump-sum investment into mutual funds or make systematic regular investments. Start by investing small amounts via SIP in mutual funds.

SIP or Systematic Investment Plan is a regular way of investing in mutual funds with smaller amounts at regular time intervals. Every month a fixed amount is debited from your account on a fixed date and is invested into the mutual fund.

Investors in their early 30s can try to have at least 30% of savings into equity mutual funds via a Systematic Investment Plan (SIP).

SIPs are beneficial when you want to plan your goals in a more systematic and organised manner, but you can invest a lump sum in mutual funds as well. There is no ideal amount to invest.

It is completely dependent on how much your goal needs and how much you can save per month. The minimum amount for investing in SIP is ₹500 per month, except for certain liquid mutual fund schemes that allow you to start investing as low as ₹100.

Liquid Mutual funds are the best way to kick off your journey as they give you better returns than a savings bank account or FD. You can begin with ₹1000 per month and slowly invest more. You can start your investment journey with HerAlpha at just ₹100.

Higher returns are usually given by certain high-risk investment products. Equity investments in India or abroad may help you with higher returns. With MF you may have to wait for years to double your money. In MF with low duration and low to moderate risk, you will get low returns.

There are 3 types of mutual funds – Debt Funds, Hybrid Funds & Equity Fund. Debt funds are short term funds and are suitable for investors with conservative to moderate risk appetites.

Equity funds are long term funds suitable for investors with moderate to aggressive risk appetites. Hybrid Funds are a combination of Debt & Equity Funds.

A beginner with a medium-risk appetite can start with a multi-cap mutual fund. You could also go for a balanced fund. Remember to keep a time horizon of 7-10 years. You can also choose an aggressive hybrid/balanced fund.

A blue-chip fund or blue-chip mutual fund is one that invests in blue-chip stocks or stocks of well-established companies with a good overall performance.

If you have the know-how and can choose mutual funds for yourself, you can always do it yourself, but you’ll have to spend time do a lot of research around the right schemes that are suitable for you.

If you are new to mutual fund investments and don’t have the required know-how, it is better to take financial advice from a financial advisor. Later, when you’re comfortable with mutual fund investments, you can start investing on your own.

You could look at schemes to invest in the Knowledge Center of the Finsafe website. These are based on research rankings.

investment planning

You could also look at Mint 50 recommended schemes and check the returns of mutual fund schemes on sites like Morningstar to compare your scheme’s performance against the benchmark and understand if the fund performance is good or bad.

Also, compare the scheme’s performance against peers in the same category. Most important look for long term consistent performance rather than past 1 or 2 year returns. Use apps of the mutual fund registrar (CAMS or Karvy) to track your portfolio status as they are safe.

You could look at taking international exposure to diversify. Investing via international mutual funds is recommended over direct international stocks. Based on your risk profile, restrict international exposure to less than 10-15% of your portfolio.

To start investing in mutual funds, you need to complete the Know Your Customer (KYC) process to verify and authenticate who you are. This is different from the KYC needed for your payment apps. Here are the steps to follow:

  • Submit a KYC form with your details
  • Submit an ID proof – PAN card
  • Submit a valid address proof

5. Investing in stocks Vs trading

If you have the required know-how then you could look at investing in stocks. However, our experts do not recommend investing in direct stocks.

Dipika says: In the current eco slowdown I think investing in shares might be a bit risky, says. The challenge with shares is that you need to do a lot of research. You need to read the balance sheets, projected profits, sales numbers etc and you may not be an expert at it.

Hence, I would strongly suggest that you invest in stocks through mutual funds. They are managed by fund managers who are professionals in that space and know their job well.

Mrin agrees: If you want to invest you can do it through equity mutual funds where the fund manager chooses when to buy and sell and how to manage the fund. All you need to do is decide what amount and what your risk profile is.

Daily trading is ideally done with the intention of booking profits. But it is highly risky and you could also end up losing a lot of money. Investing is definitely preferable to trading. Investing is for the long term and trading is to take profits in intervals.

For instance, if you are purchasing goods for yourself it is like Investing and if you buy and sell and make a profit in between, it is trading. It totally depends on your risk, nature, holding and style.

There is no good time to enter the market, just stay long term to get good returns. Like Warren Buffet himself said, “Time spent in the market is more important than timing the market.”

What are Nifty funds?

There are various Nifty 50 funds. Nifty funds are Index mutual funds that mirror the Index which is Nifty 50. Index funds imitate the portfolio of an index. Nifty funds would have investments in stocks that are the same as the stocks comprising Nifty.

You can invest in Nifty funds for diversification in your portfolio. So if Nifty stocks perform well, your fund would perform well too. It is a passive fund. This video explains more about active and passive fund portfolios.


You can choose schemes based on a consistent track record from Morningstar.in, Mint 50 recommended schemes or the Finsafe website.

6. Buying gold as an investment

Digital gold is a new Gold investment where you can invest as little as ₹1 through your Wallet. When you redeem you have two options either to take physical gold (as per the prescribed limit) or money. The time to hold is different with different wallets varying from 5-7 years.

Wallets are just the Medium/Broker through which you are investing Gold from two major companies – MMTC and Safegold. The former is Government and later is a private player.

As a whole, it is not recommended to have more than 5-10% of your entire investment portfolio in Gold. If it is for personal use, then you can choose gold jewellery.

Gold Exchange Traded Funds (ETF) and Sovereign Gold Bonds (SGB) are definitely a better option over physical gold as an investment. SGB is less risky than equity mutual funds. But the lower the risk the lower will be the returns as well.

You can look at investing in Gold via SGB when the next tranche of SGB comes up for the subscription. Watch this video to learn more about SGBs.


Investing for Diwali & Dhanteras

“You can never be prepared enough for the festive season and no one wants to live with the worry of expenses going up or paying off credit card bills,” says Dipika.

A simple example: If you think you’ll need ₹60,000 next year at the same time for festival expenses, you can start saving around ₹4 to ₹5k a month now in a low-risk mutual fund.

The investment in this can be done through a systematic investment plan (SIP). So, on a fixed date, a fixed amount is debited from your bank and goes into the fund and now you’ve set up a smart system to tackle next year’s expenses.

On Dhanteras, you could look at Gold Exchange Traded Fund (Gold ETF) for investing in the gold asset class. This is a better way of buying gold rather than buying physical gold and can be bought with a much lower amount.

“Do not look at just saving, try to invest also,” says Mrin. “You can look to put it in part of your amount into a PPF account and with the rest you could start a SIP into a mutual fund.”

7. Investing in real estate

Buying property for personal use is fine. But real estate as an investment may not be a great option as the rental yields are not great and it’s not recommended because of various other reasons like liquidity in real estate. Returns in real estate are not more than 5 to 6% generally.

Buying Insurance Coverage For Financial Protection

In her session on Why Do Women Need To Buy Insurance More Than Men?, Dipika offered some expert financial advice on buying insurance coverage for financial protection.

Understanding insurance products

Insurance is provided by insurance companies, not banks. There are nationalised insurance providers like LIC and private ones like HDFC and ICICI, among others.

Insurance is not to be confused with investment. An insurance policy provides protection for your family. In case something happens to you, they are protected from financial losses.

Unfortunately, insurance products are sold to us as an investment, promising returns in the future, and that has made people sceptical of taking the right insurance.

Gender does play a role in insurance, as when it comes to life cover, the majority of women are underinsured. Many don’t have insurance coverage at all. And women need life insurance more than ever before, regardless of career choice or marital status.

Women tend to take career breaks which can impact the insurance amounts, hence it is ideal we take significant insurance coverage in our working years. One needs to have life insurance, health insurance plans, and critical illness cover at the very least.

Insurance Coverage

Types of life insurance

In life cover, there are 3 types of life insurance plans – term plans, endowment plans and ULIP. Term life insurance (term insurance plan) should be bought for the sole purpose of covering the risk of one’s life and not as an investment.

Life insurance premiums are typically lower for women due to their longer lifespan and lower mortality. Although one’s life or death can’t be measured by money, when it comes to buying a life insurance policy we’re forced to put a number on it.

So what exactly is life insurance for? The primary purpose of life insurance is to replace a lost income when a provider of the family dies. The right type of life insurance we need is called term insurance.

A term insurance plan is a form of life cover that provides coverage for a defined period of time, and if the insured expires during the term of the policy then death benefit is payable to the nominee.

Term plans are specifically designed to secure your family needs in case of death or uncertainty. It provides a specific amount of coverage for a specific period of time. Term insurance has existed forever but no one talks about it as the agents do not earn enough commission from it.

For millennial parents, a concern for their kids’ financial future is the key trigger to buying term insurance, which is why maybe it is getting more popular. When taking a life insurance policy, look at a reputable company and choose the cheapest premium amongst them.

The savings and investment plans are part of Endowment and ULIP plans, in which the costs are very high, hence the returns are very low. So it’s better to avoid the endowment policy and ULIPs.

The ideal age to start life insurance is as soon as you start working. You can start with 5x of your annual income and increase it over time. For example, if your annual income is ₹5 lakhs then you can start with taking a 25 lakh sum assured, for which the premium may not be more than 3k per annum for a term policy.

Types of health insurance

Women are not very cautious of their health. Increasing heart-related diseases, gestational diabetes, cancer, reproductive health, depression are just some of the reasons why women in India need to buy health insurance at the earliest.

With pollution, adulteration and lifestyle diseases showing an upward trend, infertility treatments have become quite common, putting a dent in any family’s financial health. It is important that you disclose all your pre-existing health conditions related to your health before taking a Mediclaim policy.

Term life insurance is a must if you are working, health insurance (preferably covering maternity) is crucial for women irrespective of career status. The earlier you take term insurance in your working years the better for you as it is much cheaper at that time. The premium you take it at gets locked in for the term of the policy.

Critical Illness cover is also very important. A critical illness insurance policy works differently than a medical insurance policy. A CI plan is a health insurance plan that pays a lump sum amount, equal to the sum insured, to the insured on being diagnosed with a serious ailment, such as cancer or a stroke.

It can pay for the cost of care and treatment, recuperation expense and even pay off any debts that were taken. Regardless of your hospital expenses, the insurer pays the full sum insured. It is not a commonly purchased policy, but much required.

To sum up, if you’re a working professional, you need term insurance, health insurance and a critical illness policy. If you’re not working then health insurance and a critical illness policy are a must!

Just like one can ensure life, health, home, vehicle etc, there are policies that offer cover in case of job loss. In India, job loss insurance does not come as a standalone policy but comes as an add-on with a health or accident policy.

financial independence for women

How To Manage Debt Wisely

There are different forms of debt and, as Dipika explains, “Good debt is in my opinion stuff that may not give you instant gratification. Bad debt can be credit cards that have been unpaid – personal loans etc.”

“Good debt can be healthy for your long term financial future and is a current liability that will have long-term benefits, for instance, an education loan or a home loan. While now there is a cost to it, there is a pay-off in the long term.”

1. How to reduce debt

“Luxury Vs essential depends from person to person,” says Mrin. “You would be the best judge to know what’s an essential expense and not essential. Remember, the higher your debt, the lower would be your credit score and this would impact your loan eligibility in the future.”

  • You can reduce your debt by firstly cutting down on non-essential expenses like eating out, subscriptions to channels you don’t watch much, etc. The amount saved should be used to lower any debts or loans that you have taken.
  • Keep an expense tracker wherein you note down your expenses. At the end of the month, when you check you will realise how much you’re spending on non-essential expenses.
  • Start an investment like SIP or PPF where you set auto instructions to debit your account. This will force you to first save and then you would be left with only the remaining amount to spend.
  • Do not spend beyond the credit limit on your credit cards and pay the full amount due on your credit card always.

“Every ₹500 or 1000 that you invest wisely instead of spending on an impulse can make a difference, says Dipika. “One thing you can do is that for every purchase you make, invest an equal amount for yourself. That way you will realise which expenditure is actually giving you a benefit for the future.”

If you have student loans to pay off, you can check out these online jobs for students to earn money on the side and help you pay off your student loan interest. These jobs are also suitable for working professionals looking for a side hustle to earn a side income.

2. How to use credit cards and points wisely

In her session on How To Use Credit Cards & Points Smartly, Shipra Baranwal gave the following advice.

A credit score is an absolute number between 300 and 900 and a good credit score is usually 750 and above. For people who default on their credit card bills, the credit score takes a hit as it indicates a bad repayment track record.

However, if you pay your credit card bills on time, you can improve your credit scores quickly as it indicates to the bank that you are financially disciplined. Your credit score is calculated based on:

  • Your total available credit balance
  • Your repayment track record
  • The balance between your secured and unsecured loans
  • Number of loans and credit cards you have
  • Credit utilization

Credit cards can help improve your credit score, in the sense that they show your financial discipline of repaying your bank on time, therefore a good repayment track record.

Financial discipline is very important when spending cash or swiping credit cards. Paying bills on time is an absolute must otherwise the penalty is enormous. You can pay your credit card bill via bank transfer, NEFT or via Wallets.

One way that I ensure I don’t overspend on my credit card is that for every spend of more than 5000 rupees I transfer the money to my card account the next day. This keeps me in check.

Also, you can optimise your credit card if you use it as an expense management tool, and not view it as a shopping plastic, because ultimately you have to pay the bill.

You should always know the credit limit on your card and spend within that limit. If you spend over your credit limit banks may block the card temporarily or charge an over-limit penalty.

Based on your credit history you can always ask the banks to increase your credit limit. For example, a few months before my wedding, I contacted my credit card issuing bank and got my credit limit increased for high-value purchases.

There are many free credit cards in the market. Though keep in mind that it’s always a good idea to pay a small fee for your credit card as the rewards are much better than any free credit card. You can get a good credit card for as low as 1000 rupees annual fee.

There are many benefits of using a credit card over a debit card, such as:

  1. You get a 30 to 50 days free credit period
  2. It saves money. I have saved almost a lakh through cash backs and discounts.
  3. You can earn rewards that debit cards won’t allow you to.
  4. They are a secure method of payment since they offer Purchase Protection
  5. They help you build your credit score.

It’s always important to know what kind of reward you want to earn on your credit card spend, for example, cashback, Payback Points, air miles, and if that credit card fulfils it, you can choose to use them.

Each credit card offers different types of reward points that can be used to make retail purchases, buy fuel, and even get free flights and hotel stays. There are credit cards that allow you to earn reward points that you can redeem for free fuel.

One such example is the CitiBank Indian Oil credit card where you can earn 4 reward points for every 100 rupees spent at the fueling station and then you can use these points at 1 rupee value at Indian oil fuel pumps.

So essentially, if you earn 1000 points, you can redeem them for fuel worth 1000 rupees. Credit card companies offer all way from cash backs to Payback points to Reward Points with monetary value to air miles for your spending.

Personally, I like earning air miles and travel points on all my credit cards. It helps me and my family save money on travel. I have a credit card that earns me a free Business Class flight ticket for every time I spend 2.5 lakhs on the card.

I have other cards that earn me air miles and hotel points. Essentially, I try and earn travel points on my credit cards through everyday spends and then save money on travel.

One year I earned 54,000 air miles just by putting my groceries and other home expenses on my credit card. That’s good enough to get me a flight to London!

Read this article to learn how I shifted from using debit cards to credit cards and how my credit card points have helped me travel to 13 countries almost free.

credit card reward points

Travel credit cards give one of the 3 types of benefits:

  1. Fixed points
  2. Transferable points that can be moved to air miles and hotels
  3. Co-branded cards that offer privileges with specific airlines

For high-value purchases, it’s a good idea to maximize your free credit period on the card and if you have financial discipline, you can really optimize your credit card rewards.

My advice to anyone wanting a credit card is don’t allow anyone else to decide what credit card you should keep in your wallet.

Agents never tell you about the terms and conditions that are a must or the reward points you will earn. They usually, say it’s a free credit card and you should have it. That’s not enough!

Today this information is easily available on the web, so before applying for any credit card, you should know a few things:

  1. Am I willing to pay an annual fee?
  2. What do I want to earn in return for my spending?
  3. What is the value of reward points earned?
  4. Will my reward points expire?
  5. What is the late payment fee & finance charge on the card?
  6. Any other benefits that a credit card can get you complimentary (airport spa, lounge, extra baggage, free flights etc)?

For an expensive or high-value purchase on your credit card, you may want to convert it into EMI and pay in smaller monthly instalments. For example, when I bought my iPhone 2 years ago, I converted the amount into 18 months EMI on my credit card.

Again, I do not propagate over-spending on credit cards and falling into the debt trap. My advice is to not consider taking any credit card personal loan. The interest rates are very high as they are not charged on a per annum basis but per month.

Mrin agrees. “It is better to save and then buy, especially in uncertain times. Try to stay away from personal loans, especially for not-so-essential expenses,” she says.

If you lose your credit card, you should immediately contact the bank or the credit card company and block the card. If someone has misused your card, you can also dispute the charge and banks will refund the amount.

3. Taking business loans for women

You can apply to Mahila Money for a business loan for women or get a Bharatiya Mahila Business Loan. Also, check with your bank or other small business finance bank.

You can also read more about MUDRA, Small business credit, bank loans, and other small business loans for women in India.

Ladies, get expert financial advice on SHEROES

In the Mahila Money Community on SHEROES, you can ask questions and get expert financial advice and educate and empower yourself with financial planning tips to save money.

Support your family wealth management goals by speaking about money openly, especially if you’re also contributing financially to the household. Learn the basics of investment planning, so you can ask the right questions.

Start creating your own financial goals, maybe even independent of your husband. For instance, if you want to take a girls trip somewhere, set that goal as one of the things to save up for.

Visit the financial advice websites of our personal finance management experts for sound money management ideas and personal financial planning tips for the best ways to manage your money.

We hope these tips on basic financial planning for women will help you find creative ways to save money and ways to manage your money better to become a financially independent woman.

Disclaimer: The ideas and strategies on this website are based on personal opinions. They do not and should not be considered as professional financial investment advice and should never be used without first assessing your own personal and financial situation, or without consulting your professional investment advisor. All investments, including real estate, are speculative in nature and involve a substantial risk of loss. We advise you to do your due diligence before acting on any information that we publish and do not, in any way, warrant or guarantee the success of any action you take in reliance on our statements or recommendations.

Mahila Bank

Financial Planning For Beginners

How To Create A Financial Plan
How To Make A Financial Plan
Travel Credit Card Hacks

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