Personal Finances ~

Money is not everything but what money can do only money can do!!!! So, let’s make it earn for us and enjoy a better quality of life.

Just as the husband faces a dilemma in the kitchen in the absence of his wife, the wife too is lost when she has to take over and be the man of the house. This is because the women of the house are unaware of how the men manage their finances and how much is saved.

Money management has primarily been a man’s domain, however, the time has come for women to be aware and equipped with this knowledge. Women must be aware of the financial position of the family and support the family in the best possible ways especially emotionally by standing by her man’s side.

Master your Finances!!

Need to understand Family Finances

Fundamentals of Finance

50-30-20 rule

A Journey from savings to investments

Need to understand Family Finances

Fundamental of finance

Earning

Expenditure

Saving

Investing

Understanding the Income, Expenditure and Savings trend of your home.

Working women or homemakers must understand the income and expenditure trends of the family. Where does the family get its income from? How much of the income is fixed and variable? Is the income sufficient to meet the expenses of the month? Is there any room to save?

Women must follow and understand the monthly expenditure trends. Following expenditure trends doesn’t stop with your groceries’ alone. Take time to learn how much of the income flows out to meet the EMI of your car, EMI of the new house that you have just bought, Electricity expenses, credit card bills, any other financial obligations etc. Once you know the income and expenditure trend, know how the income left after meeting all expenses is saved. It is vital to know the savings of the family and how to access the same when in need. It could be beneficial in the time of a medical emergency or during any tight financial situation.

50-30-20 Rule

Once you understand this income & expenses trend of your family finances, you need to start to discipline your finance. The first step is by following 50-30-20 rule, which requires you to break your income into three parts:

It’d be more prudent to look at savings as Income – Savings = Expenditure. In other words, considering the changed times, it is wise to save a portion first from your income and then use the remaining amount to meet your expenses. This way you’re not only controlling your spending but also contributing to savings and disciplining your finances.

A Journey from savings to investments

Today’s women have more earning potential than women of previous generations. Even stay at home women are taking up their hobby as some form of economic activity. With this potential, comes the ability to save more. Saving is the act of setting aside a part of your income for future use. This future use could be short term or long-term goals. These can be your children’s educations, dependents’ health care, Children’s marriage and other related responsibilities and your own retirement and health care, personal asset goals and travel dreams. Once saved this money needs to be invested for multiplying and creating your wealth to achieve the family goals. There are plenty of short term and long-term investment plans that are available now. Short term investment plans could be helpful when you want to buy a new car or when you want to go on an overseas tour. Long term investments are schemes that help you in covering your retirement plans or when you want to fund your children’s college tuition fees. Here we would like to share a valuable info about the “power of compounding.”

Year	FD Amt	Interest rate	Total
1	5,000	7%	5,350
5	6,554	7%	7,013
10	9,192	7%	9,836

Say you have Rs.5000 and you have created an FD with it which yields 7% interest. As you can see in the above table, in the first year you get a small interest of Rs. 350/ and thereby increasing your FD amount to 5350. The same FD at the end of the 5th year would have increased to Rs. 7013 and would have reaped you interest of Rs. 2013 at the end of 5 years. And at the end of the10th year, your FD would have increased to 9,836 and you would have earned a total interest of Rs 4836 in the ten years. In ten years, with no additional add-ins, your FD has grown from Rs. 5000 to Rs. 9836.This is the power of compounding and small things add up and make big numbers. There are various other investment avenues providing different returns based on your risk appetite. Below are investments where you can invest your saved money.

A brief guide on timelines and investment options is given in the table below:

Particulars	Investment Options
Must do	Medical Insurance, Life Insurance, contingency fund
Short term	FD, RD, Chit funds, Gold Savings Scheme, PPF, NSC etc.
Long term	Real Estate, Mutual Funds, Equity, Bonds

Money is power, and that power extends not just to earning money but managing it and investing it. We might not have it all but by being aware we can influence the decisions that our family takes.

It requires perseverance, communication and staying power to convince the family of the need and the timing of savings. This may take a while and it could be an uphill task with the spendthrift family pattern.All this need to be done while maintaining the harmony of the family. For all the money has no use without harmony.

So, ladies, continue to dream about your goals, step up your game and add finance to your “must-learn” list. General awareness of the way money flows and how it can support us in times of emergency is definitely needed to be known. After all, wouldn’t we all like to breathe a sigh of relief when we know we are protected even during our desperate times.

We shall discuss situations and investment instruments in the upcoming blog section.

One situation to be handled and what needs to be done!!!