TomorrowMakers

Women today are creating financially independent lives on their own merit. But how do you ensure your financial security as a woman? Here are five ways.

5 Ways to increase your financial security as an independent woman

Across the world, women today are stepping forward as the breadwinners in their families. They are now involved in various professions, from salaried individuals to business owners, with many even emerging as innovative entrepreneurs. A woman's role has evolved from simply managing her family's financials to significantly contributing to it. 

But are they making themselves financially secure for the future as well?

As an independent woman today, being financially savvy is a must to fight the relentless march of inflation. You gain economic independence when you can meet all your expenses. But are you financially equipped to meet the potential expenses of the future? Are you financially covered to cope with unexpected emergencies? 

You must work towards making provisions for foreseeable and unforeseeable future events. For instance, you need to plan for your children’s higher education or wedding well in advance to arrange for adequate funds for these milestones. You must also be financially geared for unplanned expenses. 

Here are some guidelines to help you increase your future financial security. 

1. Get yourself financially educated 

The first step towards financial freedom is to gain financial literacy. Merely setting aside some funds is not enough; you must invest in the right avenues rather than stash money away in bank accounts. Investing allows your funds to grow and fetch inflation-adjusted returns over time. 

So, it is crucial to know about the various investment options available so you can make informed decisions. Moreover, several investment plans offer special benefits to women. You must be aware of the pros and cons and take advantage of such schemes. 

You can get knowledge about managing your finances by reading relevant articles online. You can also consider seeking expert advice from a financial consultant. 

2. Practise discipline and consistency in investments 

Disciplined and consistent investments have the potential to create a sizeable corpus over time. You can set aside a small portion at regular intervals as per your financial goal. For example, you may make monthly investments to prepare for your children’s higher education abroad. This saves you from the hassles of arranging finances at the last minute.

You may register for a Systematic Investment Plan (SIP) to venture into mutual funds. This has dual benefits. SIPs allow you to invest small sums periodically, without straining your resources. Over time, it lets you build up the funds to finance larger life goals.

Moreover, mutual funds are supervised by trained fund managers. They rely on professional acumen backed with research to manage the pool of funds from several investors. Then they invest in various stocks and bonds. This way, you can spread your investment into different types of asset classes, even if you lack in-depth knowledge of the stock market. 

Also, you can have more than one SIP, each dedicated to a particular financial goal. So, a systematic approach can help you accomplish financial security over time. 

3. Avail of insurance coverage

Insurance coverage can extend financial support during difficult times. Accidents, damages, and hospital bills can wipe off a significant portion of your savings. It is therefore essential to get your assets and life covered. Insurance is broadly classified into general insurance and life insurance. Common types of general insurance include motor, health, home, and travel. It protects the assets you have built with your hard-earned money.

  • Motor insurance can act as a safeguard against vehicle damage and third-party liabilities 
  • Health insurance takes care of steep medical expenses 
  • You can have a safety net around your home and its belongings through home insurance 
  • Travel insurance makes a peaceful and happy vacation possible. It covers misfortunes like loss of baggage and medical emergencies. 

On the other hand, life insurance offers financial coverage to your family in case of an unfortunate incident. It can help take care of your loved ones’ financial requirements in your absence. Therefore, it’s a given that you should include an insurance plan in your portfolio, especially if you are your family's breadwinner, to prepare for financial uncertainties. 

4. Diversify your portfolio 

There’s an old saying that goes ‘never put all your eggs in one basket’. It may be a cliché, but nothing could be more true. And it applies to your investment portfolio as well. Diversification of your portfolio aids in striking an equilibrium between risk and return. 

Diversification means investing across various asset types to ensure protection from concentration risk. To elaborate, if you put all your money in one asset type, it can erode your portfolio if the asset doesn’t perform well. Performance of any one investment shouldn't have a significant impact on the overall portfolio. 

In contrast, if you invest in different asset classes, underperformance in one category can be balanced through gains in others. Diversification can thus aid in reducing the overall volatility of your portfolio, supporting the gradual generation of wealth. 

5. Plan for the sunset years of life 

Retirement must not hamper your financial independence. As an independent woman, you wouldn’t want to depend on anybody for your expenses in any phase of your life. Do not let your current liabilities and immediate financial goals result in you having to compromise on your retirement planning. Start building a retirement fund to cover your expenses even when your regular earning ceases, so that you don't have to change your lifestyle. 

However, it is important to remember that creating a retirement corpus takes time. So starting as early as possible is the best way to accumulate a comfortable savings. Prioritise your expenses and stick to a budget. This habit will free up spare funds to help you invest more. You can then ensure a peaceful and financially secure retired life. 

Last words

Every woman must make planning for financial security a priority. Being an independent woman boosts your confidence and morale. It allows you to live life on your terms. But you must also take up the onus for a financially secure future and equip yourself to enjoy this freedom throughout your life. Gaining financial knowledge and making timely investments can help you achieve this target. 

And remember, review your portfolio at regular intervals as it can help ensure that your investments are in line with your financial goals.

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