Welcome to our insightful guide on financial planning for women in India! At LXME, we recognize the unique financial journey of women and provide a simplified approach to help you navigate through it. Discover empowering insights and expert advice on effective financial planning and investments tailored specifically for women. Let’s embark on this journey together towards financial well-being. Read on at lxme.in for a brighter financial future.
Since ages, we have seen that financial planning is one the powerful tool for surviving in this inflation-bearing world and fulfill all life goals. The way everyone has basic needs such as food, clothing, shelter, and education same way financial planning should be added to our basic needs. Always remember, it’s a life skill! We all know that setting goals are important, but we often don’t realize how important they are as we continue to move through life.
So, we need to plan for it. Financial Goal planning refers to setting financial goals and developing plans to achieve them. To set financial goals, one must first prioritize the events in one’s life that will require funds. Also, when you have a clear picture of what you’re aiming for, working towards your target is easy. That means that your goals should be measurable, specific, and time-oriented.
Goal-based financial planning is essential for both men as well as women. In India, Women today are breaking all barriers & moving towards personal, professional, and financial progress
and independence! However, still financial inequality exists between women and investments. Therefore, as per LXME’s Women and Money Power Report 2022,
According to LXME Women & Money Power Report 2022, 76% of women are looking for a platform that would make investing easier. So LXME has got your back to simplify money management for women. Let’s get started!
Financial Planning for Women in India
Here, we will simplify financial planning for every woman. Evidently, as women tend to live longer than men, it’s important that they take an active role in plotting out what’s happening with the money that will see them through the latter part of their lives. Financial planning is hence one of the most important skills to be learned by women. It helps in not just saving money, but also knowing your expenses. Financially independent women become role models for their children and help take out the age-old gender biases that are deeply rooted in our culture.
So let’s understand what financial planning is, and how you girls can independently manage your wealth. There are five components of financial planning viz. Insurance planning, investment planning, retirement financial planning, tax planning, and estate planning.
Insurance Planning: Insurance planning is critical so that your major risks are covered. Insurance covers only financial loss which is caused by various risks. The way you have an investment portfolio similarly you should have an insurance portfolio consisting of Life Insurance in order to maintain the existing lifestyle after the death of the bread earner, Medical Insurance to pay medical bills in case of sudden emergency as medical costs are rising, Disability insurance cover in order to ensure continuity of income in case of any partial or permanent disability, General insurance cover is non-life insurance which includes automobile and homeowners policies, provide payments depending on the loss from a particular financial event.
Investment Planning: Financial investment planning is crucial for helping you to reach your financial goals. These goals are met through creating financial resources by investing savings generated over a period of time. Every woman is unique and in the same way, their financial goals are different. You can visit the LXME app to plan your goals using LXME Goal Calculator.
The core part of investment planning consists of deciding on an asset allocation strategy that is in line with meeting the overall objectives of the woman. Asset allocation means diversifying money among different types of investment categories such as equity, debt, and gold. Asset allocation is the principal basis that decides the rate at which wealth grows in long run.
Various asset classes that you can invest in are:
> Real Estate
> Commodities including gold
According to your goals, you can invest in different asset classes such as:
You can visit the LXME app and look out for various goal-based portfolios offered such as LXME Long Term Plan, Short Term Plan, Rs.100 Equity Fund, Tax Savings Plan, LXME Gold Savings Plan, etc. These portfolios are finely curated and well-researched by experts.
- Retirement Planning: It is extremely important for you to evaluate your lifestyle and your retirement. The purpose of retirement planning is to ensure that you will be able to maintain your current standard of living post-retirement, even in the absence of regular cash inflows by the way of income. Many of them underestimate the amount of money required for a comfortable retirement. You can visit the LXME app and plan for retirement using LXME Retirement Calculator. In such cases, generally, parents need to depend on their children and alternatively have to take a hit on their lifestyle. To avoid such instances, adequate strategic financial planning needs to be created in order to create sufficient financial resources.
- Tax Planning: A lot of individuals invest only with the objective of saving tax. They do not consider money invested and how it can fit into the overall strategy of meeting life goals. Saving tax is not a financial goal in itself. Tax planning is all about using any allowable strategy to reduce or minimize tax liabilities. Tax planning is supposed to be used as a part of the overall strategy and not independently. Depending upon the prevalent tax laws, tax savings may be available on investments made in insurance, ELSS, PPF, etc. You can visit LXME app for planning your taxes using the LXME Tax Calculator. Tax planning is to aid you to minimize taxes, not evading them!
- Estate Planning: This is a very important area everyone should consider as a part of their financial planning because, for a majority of them, estate planning is the most neglected and ignored part of their personal financial planning. Estate planning is critical as a means of providing for one’s family over the long term. Failing to plan for the legal and financial aftermath of death usually results in much heartache and pain for the survivors. You should make sure that you make a registered will and appoint an executor to your estate during your lifetime and also make sure that appropriate nominations for all assets are in place.
What are the types of Financial Goals?
There are several types of financial goals that can be classified according to the time frames. These include –
- Ultra short-term goals – Goals that can be accomplished in less than 1 year are known as Ultra short-term goals. Building an emergency fund or investing for a birthday or anniversary celebration are examples of these goals.
- Short-term Goals – Short-term goals can be achieved within a span of 1 to 3 years. Examples of these goals include planning for a vacation or buying a car.
- Long-term Goals – Long-term financial goals are usually for a period of 3 or more years. Planning for retirement, purchasing a home, and investing in your child’s education and marriage are indeed a few examples.
What are the examples of Financial Goals?
Still not sure what to aim for? Here are some examples of financial goals to get you started.
1. Build an Emergency Fund – Life is unpredictable, and it’s important to be prepared. Emergency Fund should be the first one you should set, regardless of your financial stability. Ideally, an individual can set aside up to 6-12 months of household expenses under an emergency fund. This can be kept in liquid investments such as Ultra short-term funds, liquid funds & High-yielding Savings Bank A/c.
2. Plan for your Child’s education – Every parent wants to do everything possible to ensure that their child receives a quality education. However, due to rising inflation, the costs of doing so are increasing day by day. As a result, investing early in these can help them achieve their goals.
3. Vacation Planning – Want to escape from your routine and go on a vacation? If you answered yes, more often than not, it is a lack of funds rather than a lack of time that prevents us from enjoying that long-awaited vacation. And this is when Vacation planning comes into play. You can make this a reality by pre-planning it.
4. Pay off your Debt – Every individual desire to get rid of debt as quickly as possible. And that is when paying off debts is one of the most common financial goals. To know more, you can also watch a video on two ways to manage your Debts.
Therefore to conclude, ladies as you have understood the basics of financial management, start planning for your finances as early as possible as you don’t miss out on any of your goals and have stress-free finances. Firstly, You must determine your current financial status, how much can be invested, the time frame for investing & your risk tolerance.
Even small amounts of investments can compound your money and convert it into wealth. LXME has portfolios according to your needs such as a child education plan, long-term plan, short-term plan, etc. LXME Portfolios are a one-stop solution for you. If you have any questions related to Money Management, check out the LXME App and get them answered by the Money Coaches.
FAQs – Common Questions on Financial Planning For Women
What is the role of women in financial planning?
Empowering Roles in Financial Planning:
– Women play a pivotal role in financial planning, serving as decision-makers and influencers in managing family finances.
Why financial planning is different for women?
Tailored Financial Planning for Women:
– Financial planning for women differs due to unique life stages, career interruptions, and longer life expectancy.
How can a woman manage finance?
Effective Finance Management Strategies:
– Explore practical tips and strategies on how women can proactively manage finances, from budgeting to investing.
– Dive into our LXME blog for actionable insights on women’s financial empowerment: Read Now.
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