5 things about personal finance and savings all women should know


A small article on simple things in savings and personal finance every layman (or woman) should know. All too often the terms "tax" or "SIP" make women apprehensive. It need not be so. Women are natural investors and risk takers. Just a basic understanding of a few savings and finance instruments will go a long way in making one financially empowered.

All too often I find ladies and even working ladies deferring to their husbands for simple financial decisions. Many a times I find women joining "ladies kitties" groups just to have a small spending "kitty" in a few months depending on the number of members. Why is that women always take the back step when any personal finance topic comes up? I can understand the attitude of leaving the paperwork to darling hubby (that's a smart thing to do) but wont it be a good thing to be aware of how to make money grow in the simplest of manners without falling for shady schemes, thinking of kitties as investments and using the lotto to earn dubious money?

Here are the simplest things to know about personal finance.

Bank RD accounts

Walk into a bank and add a recurring deposit to your savings account. The RD or Recurring deposit will earn more than the monthly amount one spends on kitty. Add to that the food layout. Bingo! You have a nest egg at the end of one year.

Dealing with TDS

Just remember to fill up the relevant forms so that you don't pay unnecessary Tax at source (TDS) if you don't come under the Taxable group. Now that we are in Taxes we need to know something about it. Be sure to know the tax slab you fall under. Everyone has an income these days what with bank accounts, PAN cards, Aadhar Cards all being interlinked. So it makes life simpler to understand the basic slabs of individual tax. And very often you don't need to pay a bomb to the CA to file your returns. Its simple and can be done online. TDS = Tax Deductible at Source.

Insurance

Insurance is a topic everyone is familiar with thanks to LIC. But again - people still think of a policy as a savings instrument. Insurance is not savings - much as the companies selling it try to promote it as such. Insurance is well and truly insurance against something bad happening in your life and you and your family being prepared for that eventuality. When you add savings to it, it becomes expensive. Always try and buy a simple insurance without frills. Like a no-frills life insurance product is called a term insurance. It is very cheap and ensures that the family lives life relatively well off in case of any accident.

Bonds

Bonds are some of the best savings instruments I have found for people keen on assured returns. While a savings component in an insurance product might give 5-6%, a bond issued by an approved authority may well give 4-5% extra return! Infrastructure bonds are very popular and are regularly issued. They have a tax savings component too.

Mutual Funds

Mutual Funds are not everybody's cup of tea. While SIPs in Mutual Funds are becoming popular, it requires a good amount of patience. SIP (Systematic Investment Plan) in a Mutual Fund is like a recurring deposit in a mutual fund. Identifying a scheme is important. Sticking to the SIP over the cycle of an Equity market or for 3 - 4 years is also important. It is always better to start when the market is low and continue for a couple of years. Unfortunately most new investors get into the SIP bandwagon when the stock market is high and zipping and lose faith when the inevitable fall comes. Then they start selling at a loss. It is like buying gold when the price is high and selling at a low price! A look at the Nifty or Sensex will easily give a graph of the market. Mutual Funds are still the kings of investments especially in a fast developing country like India. Just requires faith and patience and google to start off there!


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Comments

Author: Kailash Kumar12 May 2016 Member Level: Platinum   Points : 5

The author has rightly pointed out about 'ladies kitties' groups which is generally used as a preferred saving option by housewives, though practically there may not be any return on the same which is possible in banks recurring deposits. Many banks offer flexible recurring deposits also which serve the dual purpose of a savings account as well as recurring deposits and offer an interest in the range of 7% to 8%. Since in the 'ladies kitties' groups , there is no interest accumulation and expenses are to be incurred on partying, that becomes more like a social gathering than a savings scheme. In my opinion, the first time women users should start by opening a savings account of their own coupled with a recurring deposit scheme. Generally the bank officials offer full guidance and facilitate opening as well as operations of such accounts.

Author: Sanghamitra13 May 2016 Member Level: Silver   Points : 1

Rightly said Kailash. Savings account, RDs and SIPs are a must for everyone. There are also so many good investment opportunities out there that requires just a basic understanding. Thanks for the comment.

Author: Sheo Shankar Jha03 Aug 2016 Member Level: Gold   Points : 4

The article written by the authoress gives sufficient insight of saving - instruments available with the Banks. However, most of the available facilities are not known to the women residing in rural areas. The nationalised banks are the Cental Public Undertakings and they are here to upgrade the life- style of the unprivileged ladies by offering wide publicities of the existing facilities such as Saving - account, RD, SIP etc so as to update their knowledge. There would be dual advantages by doing so - firstly, there will be expansion of business of the banks and secondly these ladies representing the weaker sections of the societies may earn substantially with SIP, RD etc. Moreover, there will be inculcation of healthy habits among them. However, a little care from the authorities would popularise the schemes offered by the Banks. Rate of interest for RD for these weaker sections should be raised by one percent from the prevailing norm to attract them and the losses accrued on that account has to be compensated by other welfare mechanisms. Awareness would go a long way in strengthening the women especially living in the rural areas.

Author: Sanghamitra04 Aug 2016 Member Level: Silver   Points : 0

Thanks Mr. Jha. Your response is encouraging. I will shortly do an article or the saving initiatives that can be carried out by rural women and microfinance.

Author: Sheo Shankar Jha05 Aug 2016 Member Level: Gold   Points : 0

Sanghamitra,
Your representation skill is effective. You would do well in your future projects as is evident from your lucid writing. Thank you very much for your good gesture.

Author: Partha Kansabanik25 May 2017 Member Level: Diamond   Points : 5

I have just read this informative article. The author has beautifully covered various aspects of finance and financial instruments about which a lady (either working or non-working) can play a significant role or take decision. In this connection, I would like to add the following:-

1. Budgeting: Budgeting and sticking to the budget is the first step of financial security of a family. A lady can play an active role in this regard. Ladies can make the budget and ensure that the entire family sticks to the budget.
2. Saving: A lady can easily find the way to diagnose the excess expenditure and can plug the hole. She can easily increase the level of saving of the family.
3. Investment in equities: An educated lady can analyse the performance of a company, the micro an macro economic criteria, the balance sheet of the company, various ratios used in investment and can invest in stocks (direct equities). Many financial planners feel that ladies can analyse the performance of stocks more critically and so are more successful in investment.

Concluding my response, I thank the author for this beautifully written article. No doubt, many ladies would find the article very helpful.

Author: umesh01 Jun 2017 Member Level: Gold   Points : 1

Some ladies are doing part time jobs or tuitions and earn money from that. From time to time they get some cash from their relatives, specially brother or father or uncle as gifts on certain occasions in a year. They can make a habit to save some amount out of this in various saving schemes and that will become a handsome amount in the long run.

Saving is a good habit and if you inculcate it, it will fetch you good rewards specially in times of adversity.



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