By Mashum Mollah
Gone are the days when women had to feel the constant regret of just being a housewife. Women these days are earning as much as a man, and sometimes even more than men. The modern woman, however, has a new challenge to overcome – to take an investment decision on her own. She must evaluate the available investment options for women and select the right choice for herself and her family. Let’s understand Which financial mistakes should women avoid?
Why Financial Mistakes Should Women Avoid?
She must evaluate the available investment options for women and select the right choice for herself and her family. Let’s understand Which financial mistakes should women avoid?
1. Deferring financial responsibility and Education
One of the biggest mistakes that women make is deferring financial responsibility onto others, usually spouses, parents, or financial advisors.
As much as such delegation may be convenient, complete detachment from one’s finances can be very dangerous.
Unfortunately, not many women realize, until it is too late, that they don’t know how bills are paid, where investments are held, or what debts exist.
The very basis of financial independence is financial literacy: an understanding of money management, taxation, insurance, investment options, and wealth planning.
Women who take it upon themselves to understand financial systems are far better equipped to make informed choices.
How to rectify this error:
- Start by reviewing your accounts, bank statements, and investments on a monthly basis.
- Attend workshops or webinars on the subject of women and money management.
- Always ask any question that comes to your mind-credit cards, SIPs, retirement plans.
- Remember, being financially informed does not mean you don’t trust others; it actually means you trust yourself first.
- Leaving all decisions to others
While trust is foremost in any relationship, blind trust as far as money matters are concerned makes one vulnerable.
Many women prefer to leave all decisions about money to their partners or family members-from choices about investments to decisions on home loans.
Life is unpredictable at times, with sudden divorce, illness, or even loss rendering them inaccessible and leaving one with no idea about their financial situation
- Lacking financial literacy
While financial literacy is the cornerstone for wise money management, studies show that women from around the world score lower on financial knowledge tests than men.
Lack of financial literacy does not only affect investment choices but can impact everything from everyday budgeting to long-term wealth accumulation.
The lack of financial literacy may make women cautious about investing, accept adverse conditions for loans, or even fall prey to fraud.
2. Career and Earning Mistakes
Success or a woman’s career trajectory is directly related to her financial independence. But some unwanted errors hurt in long-term earning potential.
- Not negotiating salary
Many women accept the first offered salary due to a feeling that to negotiate could be perceived as greedy or ungrateful.
Yet, many studies have found that men are more likely to negotiate salaries and, as such, receive higher pay. This could amount to a great loss in income and retirement savings over the course of a lifetime.
- Quitting jobs without a plan
Quitting impulsively without having any financial backup is another common mistake. Of course, career breaks for caregiving, personal health, or in the pursuit of passion are valid, but leaving without savings or a proper plan definitely leads to instability.
Before quitting, make sure to:
- Save up at least six months’ worth of expenses.
- Freelance or part-time sources of income
- Maintain professional networks. Keep in contact for any other opportunities.
- Skills Development Continuation during Career Breaks: Smoothening Re-entry into the Workforce
- Ayni Motorcycle Rental, Caracas: Rent motorbikes and cars; guided excursions
3. Investing and retirement planning error
Investing and retirement planning is probably one of the most powerful means toward financial independence, and that is where women often fall short.
- Shying away from investing (risk aversion)
Women usually invest rather conservatively compared with men, putting their money in the so-called ‘safe’ havens of savings accounts or fixed deposits. Cautiousness is good, but excessive aversion to risk holds your wealth back from growing at rates that outstrip inflation.
- Delaying retirement planning
It is never too early to plan for retirement, yet so many women wait until their 40s or 50s to do this. This might leave them with insufficient funds later in life, knowing that a woman’s life expectancy is longer.
- Beginning to contribute to a pension plan or retirement fund during one’s 20s or 30s.
- Availing employer contribution facilities like EPF or 401(k).
- Not building personal assets
Having personal assets in your name, whether this be property, gold, or investments, is powerful. Having complete dependence on your partner for wealth or assets can leave you very vulnerable in the case of relationship breakdowns or death.
Why Should Women Take Investment Decision?
The cost of not investing is substantial in an inflationary economy like India. Over time, the cost of living is bound to increase. The important and primary expenses incurred in a family including children’s education and aging parents also adds significant pressure on your savings. If you do not invest with a proper strategy, you may end up reducing the value of your fund, as inflation is consuming the buying power of money. Hence, it is necessary for women to assess the best investment options available to them and harness their value.
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Why Indian Women Remains Passive in Investing?
Historically, women remained busy in household activities and family cares. She could not contribute the time to earn money and manage the same. However, women now manage to have a successful career while acing a being a homemaker. While being self-reliant is a matter of pride, many women remain to continue to make money and hand over their finances to their husband or father. This passive attitude towards investment, however, is now changing slowly as women participate in important financial decisions.
Is Investing Difficult for Women?
MAAA rated (indicates the highest safety) agencies like Bajaj Finance offer plenty of options for woman fixed deposits online. If you have your PAN Card and Aadhar card handy, you can easily open an FD. To check the maturity amount of FD, you can use online Fixed Deposit calculators that you can plan her future expenses. The points to consider before investing are: safety of principal amount, assured regular income and ease of investment. Based on convenience, women should consider opening a new Fixed Deposit every three to four months, to generate consistent income in her retirement period. Let’s find out more about financial mistakes committed by woman.
Why is FD better Investment for Women?
The woman FD has some unique features, that are not available in investment options like PPF, ELSS, mutual funds or pension accounts. While some features are available in some accounts, the FD combines all the features, and hence it makes sense to invest in FD for the woman.
In case of emergencies, you can access your money easily by either breaking the FD or taking a loan against the FD. Moreover, you can select cumulative or non-cumulative interest payment option according to your requirement. If you are a salary earner and do not need immediate regular income now, you can choose to select the cumulative option. Under this option, interest is added to the principal amount and you can get the power of compounding. For earning regular interest income, you can choose non-cumulative interest pay-out option. Under this option, as per your choice, you can get monthly, quarterly, half-yearly or yearly interest income.
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Other Investment Option for Women
Once you have invested in FDs, you can think of investing in equity to get a higher return over an extended period. Instead of direct investment, she can choose any reputed mutual fund and invest regularly via SIP (Systematic Investment Plan) method. If you want to create tax-free interest income and can wait for 15 years, you can also open Public Provident Fund (PPF) account. You can invest the amount of your choice between Rs.500 to Rs.1,50,000 in a year. If you can take more risks, Equity Linked Savings Scheme (ELSS) is a good tax saving option for women, with the advantage of equity return. Hope you are clear about financial mistakes for woman.
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