One of my older and more researched articles on how women can approach finances has stood the test of time.
When it comes to personal finance, many women hesitate or even adopt a nay-say attitude which is surprising. Being home managers and excellent care-givers, women have little to zero knowledge of how small time and monetary investments can go a long way. This article points out some major worries that women have when they either have a significant other providing them with income or they are doing a job that pays well.
- How should I plan it? Paper or software?
Depends on how you see it. Paper or budget books are visual and good for women who like to spend time doing their numbers themselves. A manual budget will also require a calculator and some highlighters to create a fancy book so that significant entries are calculated properly and they stand out.
Software means automated calculation. It also means a little know-how of the technology involved in making the software. Budgeting with software is perfect for women who have time constraints and have above average technical skills.
- Should I or should I not plan the spending?
The question is relevant and households rely on this. A simple answer would be, you earn it you spend it, so you should be planning the spending. Problem arises only when the household income has more than one source. The spending plan can then be decided on consensus basis.
- Talk about it to a friend
Women love to talk. But no one loves to talk about money problems. Problems with money tend to show instability, which make people unrelenting to discuss such issues. The trend needs revamping as problems discussed are problems resolved. Women in particular need to discuss their issues regarding handling of money and investment issues so that they can reach financial freedom and be secure.
- Are retirement savings even a concept for me?
Most women of today don’t plan or even start a job with a 20 year or 30 year plan. The idea of retirement at any chosen age means either switching the mode of work or ending work and spending money endlessly. For switching and ending work terminally a backup of finances and money is required which can be called a retirement fund or a savings plan. This IS a CONCEPT for anyone LIVING.
Not planning with an end in mind is a flaw. And not planning for it midlife is an even greater flaw.
- Should I invest in investment schemes or is that the job of other people?
Investment schemes can be tacky, especially those get-rich-quick schemes. Women tend to fall for these schemes more quickly than men for the ease of it. As the saying of ‘all eggs in one basket’ goes, investments in one area can go down with that market. Investment should be made diversely in many different markets so a steady flow of income can be maintained.
- How much money should I have left by the end of the month?
Ideally 30% of your income should be your saving for the month. Your utility(if you pay them) and everyday expenses can be a major portion and can take up to 50% of your income. If you are not a high income earner, you might consider splurging every 3 months on luxuries instead of doing it every now and then. Of course the drive to spend money on luxurious items might be really strong but it needs to be contained.
- Will I be able to pay for that ‘major event’?
Yes, but only if you can build an account for it. Now this is a really separate account and has nothing to do with your 30% savings account or any future investments. But you can make an investment in some particular high return scheme keeping a major life event in mind. Many people make insurance investments this way, but as a simple suggestion there are other ways like the real estate market or the bonds market which hold the investments over a long period and eventually paying off higher in the long term.
- Will this job cover my entire expense?
That is an entirely personal question. You need to sit down and do the math. No one else will do it for you. Compute all the bills, and all the personal expenses of living and existing and put them down on a paper or software and add a 5%- 10% increment to it just in case. The increment is a contingency plan in case you miscalculated or left out an item of expense.
Now compare all this with your income. If you still have sufficient left to save, bingo, you have a good job. If not then take another job part time or freelance and compensate for the lack of income.
- Insurance plan or financial advisor- should I spend money on these fancy things?
Only spend on these ‘fancy’ things when you are sure you want to invest in purely financial areas and have no one to guide you. When you start earning, it is not advisable to opt for these options as they come with a price tag. But once you have enough to invest, these options will help multiply your savings and income to a great degree.
- How much time should I spend on my monthly budgets?
As much as you think is right to get them straight. If you get them correct in an hour, then spend an hour and double check your numbers. If you think 30 minutes is enough then get your numbers right in 30 minutes.
The ideal time to make a budget however is the start of the month, when you can project the previous month’s numbers and know for sure which numbers will be constant and which numbers will change. Then all you have to do is try to be inside those numbers.
Cheers & Best of luck! 🙂