Just ahead of International Women's Day 2024, BankBazaar, a fintech co-branded credit card issuer, released a financial guide for women saying it found that 31 per cent of women have no involvement in family finances. While over the last decade, the percentage of women in the workforce has surged from lows of 17.5 per cent to 32.8 per cent, only 27 per cent of women took financial decisions independently, and 31 per cent were not at all involved in any financial decisions in their homes, BankBazaar report said.
The guide covered various aspects of financial preparedness, from emergency savings, health insurance, maternity planning, and term insurance, to optimising investments to reach desired goals.
Emergency Fund: First it stresses that building an emergency fund equivalent to at least three times one's monthly income is indispensable. This can be achieved by saving a fixed amount monthly, ideally around 1/3 or at least 20 per cent of your salary. It will take 9-15 months to accumulate this fund but don't dip into these savings unless it is an absolute emergency.
Health Cover: While employer-provided coverage of your spouse is beneficial, it is wise to explore additional personal medical cover. Ensure it covers women-specific health issues such as breast, ovarian, and cervical cancers. At age 35, premiums for Rs 10 lakh coverage range from Rs 7500 to ₹Rs 16,000 annually, increasing to Rs 11,000 to Rs 20,000 at age 45, BankBazaar said.
Maternity Cover: Most insurers cap maternity expenses at Rs 50,000, so consider going for a small top-up that can cover your end-to-end maternity expenses before or after you get pregnant. If health insurance isn't an option, allocate some funds monthly towards these healthcare needs. Look at your projected expense, break it into 5-7 parts, and save that much each month in a bank RD. Make sure to save at least 10 per cent more than what you think you will need.
Maternity Sabbatical: If you plan to take a maternity sabbatical, ensure your family's income can support a potential 30-40 per cent increase in household expenses during this period without your contribution.
Term Insurance: Start off with a small vanilla insurance plan that is 10 times your annual salary and keep topping it up over time. Term insurance is cheap if you get it early (and they stay cheap). An expense of Rs 6,000 to 8,000 per year for peace of mind is not a bad idea, the release said.
Your First Loan: Securing a loan without a credit history can be challenging even if you are an employed woman. However, don't resort to unregulated moneylenders as these alternatives exist. Either use loans against fixed deposits or consider gold loans. In a loan against FD, the interest rate would be lower than other loans and it would be easier to get as the bank has your collateral.
Borrowing Guidelines: One should limit credit card spending to 30 per cent of the allocated limit to avoid debt and get a good credit score. Further remember that women homeowners and borrowers get various incentives on home loans, including interest rate concessions, reduced stamp duty costs, and income tax deductions.
Opportunity Cost of Lavish Wedding: While weddings are expensive, one can limit unnecessary extravagant celebrations one should the the long-term financial impact if you have invested some money wisely. Investing an extra Rs 10 lakh spent on marriage in diversified equity returning 15 per cent annually for 5 years could potentially yield Rs 20 lakh towards purchasing a house. Or the same sum could grow to Rs 1.63 crore for retirement if you invested in diversified equity returning 15 per cent annually for 20 years.
