Motherhood isn’t easy and is considered even tougher for young and working mothers. Mothers often juggle between their personal and professional roles; their lives are full of challenges and responsibilities both at home and those on the professional front. They are constantly caught between looking after the physical and emotional needs of their kids and family, besides catering to other needs such as financial and medical needs. In this constant juggle they tend to neglect their personal financial planning and protection.
Motherhood is no child’s play and mothers across life-stages need to take charge of their finances to ensure a smooth journey. Managing income helps you understand how much money you’ll need for tax payments, other monthly expenditures and savings, insurance policies, emergencies, retirement etc. According to a recent survey – reflecting women’s changing dynamics with finance, 70 percent of women save for their kid’s education and54 percent save for their kids’ marriage. Also, 76 percent of women have a life insurance policy, and 29 percent women consider medical emergencies as a greater priority and save for it.
On this Mother’s Day, Vinit Kapahi, Head of Marketing, Aviva India suggests ways for mothers to become financially independent and ensure a secured future for themselves and their family.
Create a budget
Budgeting is very important as it tells you about your income and expenses. Take stock of your income and priority expenses such as EMIs, rent, childcare, groceries, utilities, etc. If you are a working woman, make sure to keep a track on the monthly budget. A housewife can opt for work from home and plan for cash inflows. A budget will help you focus your money on what’s truly important and help curb overspending.
Invest in term insurance
One of the first steps to ensure financial security is investing in term insurance. Term insurance is a pure protection plan that provides a financial safety net for the children in case of any unfortunate circumstance. A term plan with regular income, or pension after a certain age, could be an ideal option. These policies pay death benefits apart from regular monthly income to the policy-holder or to the nominee.
Maintain an emergency fund
As a thumb rule, at any given point of time, one should have an emergency fund in the form of a regular savings account. As a mother, one should be prepared for eventualities such as job loss, sudden medical emergency etc. For an emergency fund, park your money in a savings account, fixed deposit, and recurring deposit. One should maintain liquidity worth 3-6 months of your current income and build it up to 6-12 months with time.
Invest as per your financial goals
Budgeting will also help you create avenues for savings and investments. Create an investment plan that caters to your varied life goals. One needs to invest in various assets like equity, debt, deposits, gold/real estate (in case of surplus). Take the time to educate yourself and spouse about investment options, the investment markets, and the various instruments at your disposal.
Fund your own dreams
The previous generations of mothers put everyone else first, often diverting their personal savings to fund their family’s needs. But one must learn to prioritize your financial needs as well. It’s heartening to see young mothers saving for their children’s education while also shoring something away to pursue their own hobbies and goals. While securing children’s future, it is critical to invest to continue pursuing your own dreams.
Plan for your retirement
As a mother, retirement may not be your top priority. You would first want to take care of your children and other family members. But to have a happy and peaceful retirement, you should put yourself first and plan a retirement that can take care of your needs in your golden years. Making small, monthly contributions to your retirement fund is a good idea.
Invest in government-aided schemes
There are several government-aided funds for single mothers, widow women. Also, look at different government schemes like Sukanya Samridhi Yojana for your girl child, PPF and various other schemes to earn decent returns with sovereign guarantee. While Sukanya Samridhi Yojana fetches interest rate of 6.9% and PPF will get an interest rate of 6.4%, these interest rates are quarterly revised and historically have been above long-term bank FD rates.
Financial planning should not be a priority only for male members in families. It is equally important for female members as well. A woman is fully capable of providing a financial umbrella to her family by planning wisely and investing smartly. So, though the approach to investing and the tools of investing has evolved, what hasn’t is the understanding of the importance of a secured financial plan for mothers. So, this Mother’s Day, every woman must pledge to secure her financial future herself.