Want to buy the latest Prada bag? But your EMIs and credit card bills keep getting in the way? Are you earning well, but your savings haven’t caught up yet?
Well, you are not alone! The recent International Women’s day survey shows that most women in India don’t even save a minimum of 20% of their income.
If you’re looking to change the way your account statement looks and manage personal finances with ease, keep reading this article and learn:
- Why you aren’t saving enough
- How can you manage money to buy the things you desire without putting a massive dent in your savings
- How you can get started
And most importantly, how can you save enough to afford that dreamy Italian leather bag!
Why you may not be saving enough.
Apart from macro-economic trends, economic slowdown, inflation breathing down your neck, and, let’s face it – the ‘pandemic,’ there is one more reason why your savings account still looks empty.
And that reason is the constant urge to “buy now, save later”! Think of all the times you were shopping online, and thought – “there’ll always be time to save/invest later; let me buy this now”!
If you’re guilty of giving in to that desire, you’re not alone! Budgeting habits, spending behavior, and knowledge of financial investments sum up our relationship with money.
And this relationship can quickly become toxic if we’re not mindful of it.
Think of it like your weight. You quickly put it on if you eat mindlessly and don’t work out, but the moment you start watching your diet and focusing on your fitness, you start fitting into your college pants again.
Want a healthy relationship with yourself? Start by making friends with your money!
How can you manage finances?
While it may seem complicated, you don’t need to be intimidated by it. Instead, take the time to start understanding your money and learn how you can grow it. Start small, but start as soon as you can and keep at it, and just like when you start going to the gym regularly, you’ll start seeing a real difference.
Here’s how you can get started.
Before being able to control anything, you need to measure it. Sit down with your statements and start gauging the holes in your current financial behaviors. Are you shopping unnecessarily? Could you be commuting more economically? Are you ignoring obvious ways of cutting down expenses? These are some of the questions to ask yourself.
You don’t have to spy all the time, but once in a few months, take the time to sit down with your bank statement and a cup of coffee to look at where the significant leaks are for that month. We call this the ‘Money-Date.’
Spying the Spend
Check in with yourself and see where the big holes are.
Is food takeaway taking away most of your income? Or is shopping for that 100th dress-which-you-wear-once flying away with your nest egg?
Take a look, understand, and start informing yourself of your financial position.
Budget like a boss!
Do you have a habit of writing down the tiniest of your expenses? Or are you the type who never remembers where her money went?
Worry not. Budgeting is all about taking control. Think of it as creating a map to reach your life goals by taking charge of your finances.
Don’t listen to those who advice you to stop spending on anything that is not necessary. Life is for living, after all!
One of the most pragmatic budgeting techniques follows the ’50-30-20′ rule.
In her book, All Your Worth: The Ultimate Lifetime Money Plan, Elizabeth Warren added to the popularity of the rule. The rule talks about breaking down the in-hand income into segments- each segment dedicated to various aspects of spending.
According to the 50-30-20 rule, spend 50% of your in-hand income on meeting needs, 30% on wants, and 20% should effectively be saved.
This is an easy rule of thumb that allows you to save while ensuring you’re living comfortably today and prepared to buy that well-deserved Prada bag for your future-self soon.
Pro-Tip:
At Womoneysta, we recommend preparing ourselves for curveballs by actively using those early working years to save and invest at least 30% of your in-hand income.
Let’s take an example of how this works out.
Try mapping your saving journey for smaller goals. For example, let us take the Prada bag that has got you swooning.
- Note down the price of the bag.
- For a month, journal your daily spending- start by considering your in-hand salary, then track your routine spending, and notice unnecessary expenses.
- Use this as a benchmark to budget for the next few months and figure out how long it’ll take for you to save up for the bag. Remember to use the 50-30-20 rule!
- Cut down on unnecessary expenses, but no need to go frugal!
- Check your investment mix and see how you can grow your money in the best manner,
- And voila, with a little discipline, you will turn heads at a party with that gorgeous bag.
Saving and investment instruments are your best friends!
Don’t just save; grow your money and find the right instruments to grow it. You could opt for a combination of instruments, such as Fixed Deposits, Recurring deposits, mutual funds, sovereign gold bonds, PPF, or more. Make sure your portfolio is diverse and helps you inch closer to your goals. Also, make sure to choose investment schemes based on different maturity periods to get the money you need when you want it.
More on this in Womoneysta’s classes. Find out more here.
Claim Tax Deductions
Let’s face it. No one likes to see a big chunk of their paycheck taken away. So while you are all proud tax-paying citizens, make sure you know about the sections of the law that enable you to claim Income Tax deductions. To reduce your outlay, you can also invest in tax-saving instruments such as PPF, mutual funds, and others.
Reach out to Womoneysta and learn more about these tax benefits.
Prevention is cheaper than cure!
Anyone who has found themselves in a hospital because of a medical emergency would agree that getting physically sick can weaken your financial wellness.
So when investing or saving for the future, planning for sudden healthcare emergencies should be one of the biggest priorities.
But, the question is, how does preventive healthcare fit into your financial budgeting? Annual health checkups and health and life insurance plans are ways to ensure you’re not unprepared and can regain your health without losing your economic well-being. Here are five things women should remember while purchasing a health insurance policy.
Seek expert help!
Sometimes no matter how much you try, you zone out anyone mentions the word ‘finance.’ If that’s the case, get professional help, read books or hire money coaches to help structure your financial plans.
Womoneysta offers coaching and multiple basic and advanced courses to help you master money! Check out Womoneysta’s finance courses today!
There are several other ways to manage finances, but it is essential to be mindful of your personal needs. Your financial goals and daily spending may differ from those around you, so don’t compare; focus on yourself and ensure your financial planning is tailored to your needs.
Yes, coming up with effective plans to manage finances might look complex- but it isn’t rocket science. With a bit of awareness and discipline, that luxury bag won’t seem as far as it does!
At Womoneysta, we help hundreds of women evaluate how to optimize their savings, expenses, and investments, taking into account their needs for today and tomorrow.
Get in touch with us to get the right coaching for your money matters today.