Tips For Women To Be Financially Independent
Although the concept of gender quality is getting into practice, few things are still different for men and women. For example, it may sound vague, but between the two, women still struggle more than men when it comes to money.
According to research, on average, men earn 9.4% more than women. Along with the discrepancy in earnings, women also tend to sacrifice their careers and work part-time to take care of their families and children. This gender pay gap is a cause of concern and should be addressed as it can diminish their financial independence.
In the UK, every fourth woman would not be able to support her if she gets separated from her husband. Moreover, the financial struggle grows for a woman as she grows older.
Despite longer life expectancy, women are being paid less. Also, there is a discrepancy in their pension pots as well. Undoubtedly the situation is not favorable and is a cause of concern for many women.
Women have to deal with such challenges, and there is no denying his fact. However, despite the discrepancy, being a woman, you can control your finances and establish yourself financially.
1. Financial goals
Before starting your financial journey, it is important to set financial goals that will help you to reach your destination and assess your financial position from time to time.
The goals should be achievable and realistic. Forming unrealistic goals is not going to help anyway.
For example, if you earn a total amount of £400 per month, then setting a goal of saving £350 per month is unrealistic as £50 is too little for your monthly expenses unless you make some drastic changes in your lifestyle and routine.
Setting unrealistic goals will only lead to failure, whereas setting up achievable goals will keep you motivated to do more.
Along with realistic goals, it is essential to be specific while setting up your goals. For example, do not keep them open such as “I want to save money every month”. Instead, you have to define each goal, such as “Instead of £150, I will save £200 this month”.
This way, you give yourself a target, and you can progress fast in this direction. You can also track your progress easily if you quantify your goals. Another important thing is to set a deadline with every plan to avoid procrastination in the achievement of your goals.
For example, if you wish to buy a house of your own, you have to give a deadline to yourself, i.e. “I have to buy a new house by the end of this year”.
This will help you plan out your finances in a structured way. Many women face financial instability, which makes them keep looking for cash loans to your door.
There is no harm in borrowing. The only important thing is to pay back these loans on time and stay stress-free.
2. Create a financial plan
After setting your goals, ensure to create your plan of action to reach up that goal. Keep track of all the money inlets and outlets in a month.
All bills, receipts, mortgages, payments should be noted. This will make things easier for you to look at the leftover cash at the end of the month. You can easily calculate your disposable income and savings.
Start creating a budget every month and stick to it. This way, you can track your spending and cut down on unnecessary spending. However, it is crucial to remember not to be harsh amidst all the budgeting and goal setting.
Goal setting and budgeting have been devised for your convenience and not for pressurizing yourself.
3.Emergency fund
With all the goals, make sure to set a goal of building an emergency fund. An emergency fund helps you stay safe during any unexpected event in your life.
For example, if your car breaks down during any journey, you have an emergency fund to pay off your car expenses. In addition, if you have any medical emergency, this emergency fund will help you pay off your medical bills and ease your burden.
It caters to your unplanned costs. According to experts, ideally, your emergency fund should have at least three months of your living costs.
It is not necessary to save a large amount of money every month. Instead, you can start with smaller amounts and keep on adding to your emergency fund.
To avoid any miss in your payments, you can automate the payment process through direct debit from your bank. This will take care of your emergency fund without you being worried every month.
4. The investment way
Saving should be an indispensable part of your finances every month. It is a good option, but in the long term, inflation may affect your savings as the value of goods and services increase over time.
This may lead to making you lose your purchasing power. For example, you have £100 saved today and saved even after 4 years. The amount remains the same in the long run. So today you may be able to buy 4 things from your savings of £100.
But, due to inflation after 4 years, you may be able to buy only 2 things from your savings amount of £100. If you save your money in the bank, you will be given interest in your savings.
But if the interest rate falls below the inflation rate, it decreases the value of your savings.
To get the real value of your savings despite inflation, you can consider investing your money in various investment options. This is because, in the long run, investment plays an important part in your financial growth.
In investment, the interest rates that you receive are not fixed and are fluctuating.
The interest rate depends on the market. Initially, you may get a lower interest rate, but in the long run, your investment pays you well and increases your financial pot.
According to a study, if you keep stock for 10 years compared to your savings, your stock will pay you better between both.
You have to make informed choices while investing your money. To stay clear in your approach, you can also seek expert advice to know more about savings and investment.