5 important tips for women to start financial planning in the New Year

As another year draws to a close and the start of a new year draws near, it is natural to get caught up in a vortex of ruminating on the events of the past year and pave the way for the annual ritual. resolution. In money management too, reflections on the successes and failures of the passing year can serve as valuable long-term lessons. We spoke to five women to learn about their learnings from this year and what they hope to accomplish next year.

The power of good old budgeting

“I am convinced that New Year’s resolutions only work when they are based on a lesson you have learned from experience. A resolution that doesn’t have its roots in an episode where you had to face some difficulties is more difficult to stick to. But as the saying goes, the smartest thing to do is learn from other people’s mistakes and that’s what I plan to do next year, ”laughs Yoshita Tandon, 26. , when asked about his plans for the coming year.

A management consultant, Sharma, is clear about the resolution-making exercise. “My only goal will be to religiously stick to my budget and achieve my investment goal every month. It’s not that I’m starting my savings and investing journey now – I’ve been doing this for some time. But staying disciplined has been a challenge for me. On many occasions, I find that part of me is trying to educate the impulsive other part that is more determined to give in to temptation, ”Tandon says.

A strong budget is the first stepping stone to healthy finances. Only when you can stay on a budget, put aside a mass of savings, can you channel it into investments to achieve your goals.

Break with stereotypes

Too many women have been left out of the spectrum of financial inclusiveness for too long and it is no surprise that women find it difficult to be confident in their decisions even if they achieve a certain degree of knowledge- do financial. Sushmita Nagpal, 31, has decided to abandon patriarchal tropes over the next year and become confident enough to make all the financial decisions on her own without having to ask for her husband’s support.

“From the day I got married, my husband has taken care of all the money I earn and the possessions I have because I would delegate these tasks to him. Somehow, societal conditioning made me feel that my money would be more secure in its hands. However, lately he’s started to push me to take an interest in finance because he knows it’s a life skill and I shouldn’t depend on him. Although I have learned a lot over the past two years, I lack self-confidence and still want to ask for her approval. Unlearning the idea that portfolio affairs are best run by men will be concentrated in the coming year, ”she said.

The mantra of goal-oriented investing

Investments can’t be a one-size-fits-all formula – the path to a successful investing journey is to keep your investments aligned with your goals. Many people make the mistake of choosing investments based purely on returns without considering the suitability of the asset class for their needs. Add to that the prevalence of low financial literacy and that is enough for many people to put them on the path to financial loss.

With goal-based investing, you can assign values ​​to your goals, which can pave the way for efficient and optimal use of your financial resources. Anisha Rathore, a 40-year-old housewife who started managing her finances on her own a few months ago, says: “I used to be someone who invested without thinking about the ‘why’ factor. After a while, I realized that goal setting helps set the direction for your financial plan. There is a need to link investments with clarity of when we are going to use it and why we are investing. Over the next year or so, I want to make goal-based investing the heart of my financial planning exercise and move away from the habit of not tying an investment to a goal.

Retirement: ignorance is not happiness

Planning for retirement is one of the main chapters of your financial journey. It is one of those goals that will have a significant impact on the latter part of your life. Your financial preparation for retirement will be based on the investment strategies you undertake in your twenties and thirties.

The fact that retirement is a long-term goal can make many people complacent about their retirement investing game. For women, who may be used to having male family members handle the reins of finances, retirement planning may take a back seat. Urmila Singh of S9 Financial Planners says: “From my experience with my clients, I have seen that they think of travel, raising children or starting their own business as goals, but they are missing one aspect. essential: planning for their retirement. For all of the above, there is a loan but no retirement loan. Women should therefore be careful to plan their finances for retirement. “

Choose the right asset classes

There are a significant number of investors in India who avoid asset classes that carry an element of risk. Gold, real estate, and traditional investment instruments such as term deposits, postal savings plans continue to resonate with many and this is especially true of people who have recently taken up money. habit of saving and investing.

However, playing super-safe and investing without worrying too much about whether the investment can generate enough returns for a specific goal can be harmful in the long run. Preeti Zende of Apna Dhan Financial Services says, “I always advise that the financial planning process begins with identifying your financial goals, breaking them down into short, medium and long term goals. Next, you need to decide on your asset allocation based on your ability to take risks. Mutual funds are one of those products that suit all of your needs. If you’re new to mutual funds, start with a liquid fund that will come in handy for parking your emergency fund. Then, for short-term goals, start investing in conservative hybrid or aggressive hybrid funds. For long-term financial goals, a combination of index funds, Flexicap caps, and small exposure to international funds can serve the goal.

Key points to remember

1. Remember or underestimate the importance of building a contingency fund that can help you support yourself and your family for 3 to 6 months in an emergency. Insurance coverage should also be reviewed from time to time.

2. Continue to educate yourself about personal finances and invest wisely. Have a financial planner who can guide you, but ultimately you should have the power to make decisions about your money.

3. Investments can’t be one-size-fits-all – the path to a successful investing journey is to keep your investments aligned with your goals.

4. Your financial preparation for retirement will be based on the investment strategies you undertake in your twenties and thirties.

5. If you are new to mutual funds, start with a liquid fund that will come in handy for parking your emergency fund.

This article is part of the HT Friday Finance series published in collaboration with Aditya Birla Sun Life Mutual Fund.