Financially secure your self and future
(Based on text by Riju Mehta)
Many women these days find themselves in a position that can best be described as ‘sandwiched’. They are constantly caught between looking after their kids and parents and the physical and emotional needs of both these groups, besides catering to several financial, medical and legal needs. They are the Sandwich Generation of mothers, or Gen S. In this constant dual juggle they find themselves in, they often tend to neglect their personal financial planning and protection. Here are 5 crucial money tips for those superwomen to secure their own future.
Get retirement-ready
You have to keep aside a retirement corpus and not touch it. Equity is a good tool to realise long-term goals since it offers high returns in the long run but experts say that you should make your retirement portfolio a holistic mix of instruments, don't let it be skewed towards a particular asset class. While debt brings safety, equity brings the magic of compounding to your portfolio. Start saving for your retirement as soon as you start working and supplement it with pension plans, EPF, PPF and NPS investments.
Buy insurance
As a mother, you almost always have dependants, whether or not you are earning and so, you should be adequately insured for life. You can buy a term plan online, which should be 7-10 times your annual income. A family floater health insurance plan is advisable to cover your spouse and children. For senior citizen parents and/or in-laws, go for a separate mediclaim plan. Also add to this kitty an accident disability cover.
Build emergency buffer
You need to have a portion of your savings readily available and accessible. For eventualities and chance events that give rise to immediate liquidity needs, you must have an emergency corpus in place. If you have a medical buffer for parents, keep a contingency corpus equal to 3-6 months of your expenses. If you don’t have a medical corpus, you should keep an even bigger fund. If you or your spouse suffered an income setback in the covid pandemic and didn't have an emergency corpus to draw upon, you would have realized its importance and know better now.
Take some tax breaks
Since Sandwichers shoulder an additional financial burden, they need to increase savings. Did you know that you can invest, insure and save via your parents, spouse and children in such a way that it brings down your total income tax liability? Find out about and avail all of these tax exemptions and deductions. Seek the help of dependants to maximise tax savings.
Up the equity
Most Gen S mothers have long-term goals and should thus utilise the potential of equity because it is the only asset class that can beat inflation. Gold also gives inflation-linked returns but experts advise against going for jewellery when looking to invest. Market-linked options such as ETFs or sovereign gold bonds are much more efficient.
This article was originally published on economictimes.indiatimes.com.
