ARTI ARORA CFP CM | HEAD FINANCIAL PLANNER
Our last few blogs have been around product choices and so for this week we tried to move away from 'products' to 'practice'. Different kinds of investors deal with their finances differently and in this write up, we will be focusing on one such kind of investor category which is the working women.
Working women already have too much in their kitty to deal with and in dealing with everything else, their finances take a back seat for most of them and this is the irony of the situation.
Why and how is this the irony?
It is ironical that the subject matter which is ignored and not paid enough attention to, if dealt with efficiently can pave way for everything else to be taken care of and rather well. While managing finances may seem to be cumbersome and time consuming, if you follow the right process, it isn't. In fact, it is extremely satisfying & engaging.
What do we mean?
Very simply put, we mean that if working women take little initiative with respect to their finances and invest wisely, they can do everything they may aspire for including developing an alternate source of income to their regular income, planning for earlier retirement, creating a support structure for their kids to be taken care of in their absentia or doing anything else that demands money.
This subject or the dilemma that working women face with respect to their investment decisions is being discussed on different forums of women empowerment. Here, rather than discussing the challenges working women face and pondering over the problem, let us instead focus on the solution. While the subject needs much contemplation, the best way of addressing this issue is by educating women about the globally accredited and accepted financial planning process.
In the time strained lives of working women, financial planning approach can work wonders by giving them direction & logic for all their investment decisions so that they exactly know the path they are treading on and why.
The financial planning process involves identifying and quantifying one's financial goals and then planning for them in line with one's own financial situation. So, rather than just making any random investment, you first identify what you are investing for, assess your risk profile (by answering a few simple questions), understand your cash flow situation in terms of normal household budget to arrive at discretionary cash flow available with you and then invest this surplus in the chosen investment avenues.
The above step by step approach offers the most comprehensive and tailored financial solution that any working woman can seek. The initial plan creation takes a little time and demands involvement in terms of data gathering and putting up all the relevant details together but thereon it's only about reviewing the plan annually (unless special situation requires an earlier review) and one can be rest assured that their financial life is shaping well. As per one's investments, a quarterly review with the advisor is suggested but should there be a need to rebalance portfolio, one must give it little more time as a quarter is too little a time to judge an investment's performance.
This way, the whole investment planning process is carried out more efficiently as it becomes part of the bigger picture and is better addressed without working women having to spend more time on planning individual investments and then keeping a track of them separately.
Social conditioning, myths around the subject being highly technical, peer pressure, fear of losing money, having to deal with quite a lot already, etc are some of the common reasons of women in general and working women in particular not being active in managing their finances. It is time to change this and it is only about following some simple steps as outlined above.
To summarize the above, financial planning process followed prudently is the perfect answer to the jigsaw most working women face with respect to their investment decisions.