Womenlines takes pleasure to welcome Geetanjali Tandon as a guest writer on Womenlines panel. She has more than 15 years of experience in corporate finance specifically in Financial Planning and Analysis in various companies/ industries. In this article, Geetanjali shares about the importance of taking charge of their financial planning by Womenfolk-
You are responsible for your own well-being and health. You take care of your health by watching what you eat, going for regular check-ups and exercising so your body remains healthy and better prepared to bear the weathering of ageing. Do you do the same for your financial well-being?
This is especially applicable to women. How many married women actively participate in managing their own finances and review their financial well-being on a regular basis? If you are a married woman and are asked if you know about all your bank accounts, credits cards, loans and investments, would you know all the answers? Or will you have to pause, think, ask your husband and get yourself “financially literate” about your own finances. Unfortunately, a large percentage of married women would be the in this category. In 2014, a study conducted by the Global Financial Literacy Excellence Center found an even greater gap: only 22% of US Women surveyed, compared to 38 percent of men, could answer three simple finance-related questions correctly.
U.S. President’s Advisory Council on Financial Literacy in 2008 defined financially literate as “the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being.”
Women cannot afford not to know about their own finances. It is essential to take ownership of your finances, and also gain knowledge through brands like SoFi who offer products such as loans, credit cards, and a ROTH IRA calculator to calculate savings, all of which can help people manage their money better.
In a marriage, it is not one person’s responsibility or their right to do this all alone. It is your responsibility to become financially literate and fully participate in your family’s financial decisions. Too many women are told not to talk about money or question the decisions made by husbands regarding financial health as it’s considered crass and unfeminine. Per the 2013 Allianz Women, Money, and Power Study, 90% of women surveyed believed that they should be more involved in financial planning. However, 42% said that financially independent women were intimidating to both men and women and end up alone.
On the other hand, empowering women financially has shown more families coming out of poverty as women make decisions for the well-being of the whole family and take long-term impacts into consideration. Here are 7 steps you can take now to start taking charge of your finances:
- Know all your accounts: Understand all the types of accounts you have—savings, checking, fixed, etc. Understand how each of the accounts works and the interest earned or fees you may be charged for some of those accounts. If you have had to move from one country to another, you must maintain accounts in multiple countries and learn the banking rules of the new location. Take your time to understand the different types of accounts and interest and fees for those accounts.
- Know your investments and loans: Understand what investments you have. Investments help grow your money—make your money work for you. It is very important to invest your savings prudently. Money sitting at home losses value rather than gains value. Invest in a variety of investment types—real estate, stocks, mutual funds and even commodities such as gold and silver. Review your entire investment portfolio and evaluate its diversity and understand how much risk you can and should take based on your age and other circumstances. Just like your investments, you should have a complete understanding of any loans you might have—home, car, credit cards, etc. Understand the interest rates and terms for each of them. Taking stock of your investments, savings, and loans help you understand what your financial value is at a certain point in time and based on its components whether you expect it to grow or decrease in the future.
- Know your budgets and what you spend on a yearly basis: Budgeting is a very important exercise. Budgeting does not mean that you should check your balance and expenses every time you spend your money. Budgeting means should you have a good idea how much of your money you want or must spend in various areas such as rent or EMI (mortgage) for the house, electricity, car, food, entertainment, travel, clothes, etc., on an annual basis and review that regularly.
- Plan for big spending items that you anticipate in the future: We all must plan for some of the big expenditures that may come up in the future. One of the biggest ones that you should plan for is your kid’s education. You should have the discussion regarding what kind of school and university education you will be able to afford. This should be a realistic discussion between husband and wife, and when they reach an appropriate age, the kids should be informed what to expect. We all want to provide the best education for our kids but we should also know the limitations of what we will be able to afford without ruining us financially. It is unrealistic for us to expect the kids to look after us because we used all our savings for their education. This planning should be done for each child—do not expect the elder child to pay for the younger one. We should also plan for any expenses we foresee for our parents’ needs and save for them accordingly.
- Save for Retirement: The average life expectancy for both men and women is increasing but women’s’ life expectancy is longer than that for men. As a woman, you should plan to live with financial freedom in your old age. Retirement savings should start as soon as you start working. Each country has different tools to save for retirement—know the rules and take advantage of these tools. Even if you are not an earning member of the household you are an equal member of that household. You should have an open conversation regarding the lifestyle you want in your old age and save accordingly. Do not depend on your children to provide for you. Make sure you have enough savings to live comfortably and pay for medical needs as you grow older.
- Learn basics about finance and taxes: There are a lot of resources available today on the internet that provides information about personal financial planning and provide definitions of the basic financial terms. Take the time to read and learn. Taxation is another area that affects the decisions you make in both the short and long term as it impacts your investments, savings and retirement accounts. Each country has different tax laws. Make sure you are involved in the annual tax filings and take the time to understand them.
- Ask Questions: No question is a wrong question especially when it concerns your own money.
It is your money – Own it!
Global IT Finance Lead
Greater St.Louis Area
Follow Womenlines on Social Media