As more women foray into non-traditional investment avenues, finances need to be broken down and tackled according to a certain pattern. This just makes it much easier to decipher what's good for you and how you should be going ahead investing, writes Hena Mehta

Todays woman is unafraid and unabashed to seek out for what she feels she deserves. Whether it is a career choice, business idea or education option, women are finding themselves more and more at the top of their game. But what is lacking, however, is the need for women to take charge of their finances too.

While women earn and save, most women do not foray into non traditional investment avenues. Could this be lack of knowledge or lack of trust? Or both?

But even finances need to be broken down and tackled according to a certain pattern. This just makes it much easier to decipher whats good for you and how you should be going ahead investing.

The first part of this process is to educate yourself. You need to know how strategically you can save up and how this strategy can grow your money better. A Standard & Poor Survey conducted in 2015 showed that over 80% of women in India are financially illiterate. This could be due to various factors, but general lack of knowledge is one amongst them. Less than 1% of Indian women invest in the equities market. Based on our primary research at Basis covering 500 urban women ages 24-45, 70% of women have financial savings to invest, however, 60% of the total cohort is still searching for better investment avenues.

Despite the growing awareness of financial independence among women, only 33% take their own investment decisions, compared with 64% men.

Women tend to save in more traditional avenues like gold and fixed deposits, but the growing need to invest smartly with increasing inflation rates is moving women towards wanting to invest in new avenues.

Educate yourself

Taking charge of your finances cannot be an overnight exercise. There is always a learning curve involved. Become financially literate so that you are capable of handling your finances. Read regularly to understand various investment avenues follow a few financial blogs, perhaps even take a financial management course. A good place to start is the learning modules on the Basis app.

Expense management

You know how much you make but do you know how much you are saving? Get involved in your expense management discuss these with your spouse or parent. Take a hard look at your expenses. You may find unnecessary and avoidable costs, which you might realise by paying closer attention. Once you know how much you have every month to invest, you can allocate investments accordingly.

Access, assess and analyse

To know where you have to reach the first step is to understand where you currently stand.

Access: From net banking IDs to Demat IDs and passwords, list down all the places your money is currently invested. It can be across banks, across Demat accounts, and even across Asset Management Companies (AMCs). Vault all your IDs and passwords securely, tools for this very purpose are also available now.

Assess: If your parents or spouse have this organised, its a plus. But if not, then get down to assessing your portfolio. Call in for bank statements for account balances and deposit balances.

Analyse: Analyse your current portfolio. Categorise your investments and ask yourself these questions do you have diversified investments? Or do you have several overlapping investments in similar instruments?

Goal Setting

Identify your financial goals. If you are married, discuss common goals with your spouse buying a car, a house, funding for childrens education, and retirement, to name a few. But also make sure to incorporate your personal goals travel, further education, or maybe even planning for a sabbatical or other personal aspirations. Map these with your existing investments.

Invest for your goals

Goal mapping is the crucial step to chalk out a financial roadmap, which may involve rebalancing your portfolio. Do not hesitate to consult a financial planner if you find yourself getting overwhelmed. Once you have a financial roadmap in place, set up your investments, including any standing instructions to your bank or mutual fund house.

Revisit

Investments, especially long-term ones, are something we should keep track of with a knowledge-based approach rather than sentiment-driven actions, but you must not lose sight of your finances. Be current with your knowledge of the market scenario to take advantage of any lucrative investment opportunities. Any change in income, significant expenses, or goals should also be incorporated in your financial roadmap.

Earning money is one part, but managing your earned money is what can make you truly financially empowered and independent. So, ladies, roll up your sleeves and gear up to take charge of your finances!

Policies that affect you

Once you know about how to go about savings, you need to know about the laws that affect you. This means staying on top of policies and regulation around taxation and investing.

Tax Regime: One way your money could be affected was through the governments proposal to introduce a new optional tax regime without exemptions and deductions. This will adversely affect the savings in India. In the 2020-21 Budget, Finance Minister Nirmala Sitharaman provided an option to personal income tax payers to remain in either the existing tax scheme with exemptions and deductions or opt for a new simplified tax regime with lower tax rates but without exemptions and deductions.

What this means is that, you could either choose to save and invest as you had been doing before, or move to a flat structure that doesnt entail your Rs 15 lakh deduction under 80C, but in turn, you get to pay a lower tax bracket.

Under the new tax proposal, people with an annual income of up to Rs 2.5 lakh will not have to pay any tax. For income brackets between Rs 2.5 lakh to Rs 5 lakh, the tax rate is 5 per cent.

Further, those with an income of Rs 5 lakh to Rs 7.5 lakh will have to pay a reduced tax rate of 10 per cent; between Rs 7.5 lakh and Rs 10 lakh 15 per cent; between Rs 10 lakh and Rs 12.5 lakh 20 per cent; between Rs 12.5 lakh and Rs 15 lakh 25 per cent; and above Rs 15 lakh 30 per cent.

Government SOPs

We all know that the current situation has been difficult for all of us. With this, also came a few financial changes and the government. SoPs that affect your money. Knowing about the latest government facilities available, can help you plan and execute your savings better.

The Income tax filing deadline: The income tax filing deadline which was earlier July 31st, 2020 had been postponed to November 30th, 2020 .

FDs and PPF: PPF rates have been cut from 7.9% to 7.1%. FD rates have fallen to 5.5% too. The interest gained on these is likely to be negligible with rates expected to fall further. This is most likely to affect senior citizens who depend on these schemes. We recommend taking another look at your portfolio and investing in mutual funds.

EMI Moratorium: All term loans home loans, personal loans, education loans etc, including credit card payees, can avail a three month deferment starting March 2020. For those under financial duress, this can help relieve some pressure. However, if you can afford to continue paying them, please do so to avoid the interest piling up cumulatively. Remember that the moratorium does not apply to the interest on your loans.

EPF Contribution: According to the Aatmanirbhar Bharat Package, the EPF contribution requirement has been reduced to 10% of your basic and dearness allowance as opposed to 12% for three months starting May. It simply means an increase in your in-hand salary. Do note that this increase is now taxable. If you want to continue contributing your 12%, you could do so but your employer will be contributing as per the new directive.

TCS & TDS Reduction: There has been a 25% reduction in both TDS and TCS applicable till March 31st March 2021. For a lot of non salaried individuals, this move helps increase spending power substantially. If you want to avail this service, you will be asked to furnish your Aadhar and PAN card details when you raise an invoice.

Select Government Schemes for Women Entrepreneurs

Several financial institutions have introduced schemes to power the woman entrepreneur. Ive highlighted a couple of them here:

Stree Shakti Package For Women Entrepreneurs: This scheme, run by SBI, is for women who own the majority of a small business (>50%), and whose business is registered with the Entrepreneurship Development Programmes (EDP). The scheme allows a concession of 0.05 per cent on the interest on loans that are greater than Rs 2 lakh.

Mahila Udyam Nidhi Scheme: If youre a woman looking to set up a small venture, this scheme offered by Punjab National Bank and Small Industries Development Bank of India (SIDBI) can give you a loan of Rs 10 lakh for 10 years, with a 5 year moratorium. Interest rates depend on market rates.

In Conclusion

Historically, men have been the owners of wealth, and by extension, the financial decision-makers. However, gender roles are becoming outdated, including roles related to money.

As women, we live longer than men, face the gender pay gap at work and have higher healthcare costs and hence need to prudently plan and understand our finances. The good news is that the desire to become financially independent is strong.

The real question is whether this financially independent woman has the resources to manage her money wisely. Lets roll up our sleeves, unite and take charge of our financial destinies.

The writer is CEO and founder, Basis

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Women and finance - Daily Pioneer