Mother's Day Special: 5 ways to master your finances
Retirement preparation is crucial for everyone, but it's especially important for working mothers who must strike a careful balance between their obligations to their families and their careers. When a working mother needs to take time off from work to raise her children, this juggling act may frequently negatively affect her ability to save for retirement. Because of this, it is more crucial for them to make retirement plans in advance and mater their finances.
How long would it take, for instance, for your firm to break even and turn a profit if you wanted to take a sabbatical from running it? How long would it take before you start to see the money coming in if you want to change careers? The most crucial question is how you want to reorganise your income if you are taking maternity leave or intend to leave the workforce to raise your child in order to help you pay off your systematic instalment plans (SIPs) for investments.
Let's take a look at how women should set up their money this Mother's Day so they can master their finances.
1️⃣ Early Investing
We are all aware of the wealth-building benefits of compounding. Few understand that in order for this ingredient to have an impact, one must spend early. Long-term, women who want to get married and start a family must distribute their income among several investing options based on their risk tolerance. Choose large-cap mutual funds over smaller ones because they tend to be more stable and produce returns that outpace inflation. However, they might also think about investing in gold by, for example, storing some of their cash in gold mutual funds, gold exchange-traded funds, or sovereign gold bonds. Invest in a health insurance plan that includes a maternity cover benefit that may be added to pay for pre- and post-hospitalization costs.
2️⃣ Efficient Asset Allocation
Planning for retirement as a working mother requires careful consideration of efficient asset allocation. Working mothers can allocate their investment funds effectively across several asset classes to meet their long-term financial objectives. To balance the risks and rewards of both, it is crucial to build a diversified portfolio that includes both equities and fixed-income products. Using this method, they can tailor their investment portfolio to fit their particular risk profiles, minimise risk exposure while maximising returns, and align assets with their specific risk profiles.
3️⃣ Avoid Locking Your Money
Within a few years, real estate can help you quadruple your capital, but doing so locks your money in riskier assets. Additionally, since it is challenging to sell fixed assets like these, you must stay away from Stop using credit cards for the time being if you find yourself unable to pay your monthly bills. The finest type of financial security—which so many people undervalue—is being debt-free.
4️⃣ Utilise Remote Working
During your maternity leave, you might not be able to replace your present source of income. However, if a remote job opportunity arises that enables you to work from home, you might take it. By doing so, you can pay for both necessary and optional costs while also making some savings. Set aside some cash for an emergency fund that you can use to cover your SIP obligations while you're unemployed. As an alternative, you can look for a modest source of income that would enable you to cover your regular expenses without experiencing undue hardship.
5️⃣ A Backup Plan
New mothers quickly discover that they are incurring expenses that they may not have previously anticipated. Cutting costs might not be a good idea because the majority of these costs would go towards childcare and medical care. However, increasing costs can make a lot of them apprehensive. This suggests that they should have enough liquid assets on hand. Your ability to access sufficient funds when needed is ensured by small sums placed in fixed deposits and short-term debt funds.
It's not required for things to go according to your plan. Regardless of how carefully you may have planned your break, unforeseen setbacks might pose a significant obstacle. Talk to your spouse and family members about your plans. Allow them to point out your weaknesses so you can adjust your strategy. By doing this, you can prevent having your loved ones constantly bug you about your financial missteps. Believe what your partner says.
Don't ignore the risks. If not caught in time, an overly ambitious mindset could develop into an oppressive habit.
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in the stock market is subject to unpredictable market-related risks. The author has no plans to invest in this offer and also the author does not recommend investing in any offer published on this website.