Personal finance management tips for women

Women need to handle their finances differently from men. Mainly because of the differences in the earning patterns and priorities that women set for themselves their finances should be managed in a different manner. The basic goals of personal finance remain the same, i.e.,

> Ability to meet daily expenses and lead a quality life

> Provide for emergencies and unplanned expenses and

> Savings for life after retirement

However, the way in which men and women achieve these goals is different. While men earn money uninterruptedly throughout their working lives, women often need to take a break, especially when they have children.

Other reasons like orthodox family backgrounds, change in location after marriage, change in spouse's job location, household responsibilities etc can also require women to put their career on the back burner.

We have the much debated case of Mrs. Sudha Murthy- wife of Mr. Narayana Murthy, founder of Infosys. The couple was instrumental in building the Infosys dream. As the business started taking shape, the couple decided that one person was required to take care of their home and family.

Mrs. Murthy gladly stepped aside to be the homemaker and let her husband fulfill his dream. Cases of women going abroad on a dependent visa with their husbands are not uncommon.

So, if a woman earning Rs. 50,000 per month takes a 5 year break from her job because she wants to be at home with her child, her earnings and thus savings take a hit of Rs. 30L.

We have not yet considered any increment in her salary. If we consider that her salary increments by 20 percent each year, her loss of earnings will come to Rs. 44.65L. That's a big number.

Also, when she resumes work, she may have to compromise on the job profile, position and hence salary. Therefore, the percentage of savings should be higher for women during their working life.Besides, the life expectancy for women is higher than men. So, the amount of retirement savings for women should also be higher.

Statistics show that, on an average, women live 5 years longer than men, earn 25 percent less during their life time and work 11 years less in their careers.

Importance of having an individual personal plan separate from your spouse

It is important that women have a separate personal finance plan from her family, be her parents or her husband. With changing times the need for separate finances has increased. The rise in divorce rates is alarming. The surety of life is also lower with increase in accidents and stress related ailments.

If a woman handles her own finances she is well prepared to handle money matters individually if the need arises. Knowledge of different investment avenues, savings and expenses is important to run a family.

A separate personal finance portfolio will prepare a woman to face financial challenges. Also, she will not have to bear a monetary loss in the event of a divorce

Regular Income: Even when women take a break from their careers, it is a good idea to earn income from working a few hours a day. Taking tuitions, teaching a hobby etc are common ways to earn a regular income even when one is not working full time.

> Keep an emergency fund. Do not touch it unless it is a real emergency.

> Save and invest as much as you can. Invest in 'high return' investments. Some part of the savings should go in to stocks and mutual funds as they have a high earning potential. Look for women oriented products.
> Time your investments for known expenses likes children's education or marriages

> Demarcate clear boundaries with your spouse for routine expenses. It will be easier to determine personal monthly expenses and hence monthly savings.

> Track your savings and investments regularly.

> Have a financial plan. Save as much as you can at an early age when you have limited responsibility.

Assuming you plan to save 50 per cent of your income every month and wish to invest in different investment products, you could compartmentalize your investment into various risk categories. Click to see some risk categories for investments

You can change the portfolio as per your risk appetite. Life Insurance is a must. However, it is advisable that you set aside the money for making premium payments even when you are not working

India must tread careful path between growth, inflation fight

India must balance any measures it uses to control rising prices with any risks they pose to economic growth in the wake of the European debt crisis, Finance Minister Pranab Mukherjee indicated.

Inflation in India "is a matter of concern," Mukherjee said in an interview in Washington yesterday.

"I do hope that the steps we've taken both on the demand side and supply side will have a moderating influence," he said.

India's benchmark wholesale-price inflation unexpectedly accelerated 10.16 per cent in May from a year earlier, near the fastest pace in 17 months, government data showed.

The Reserve Bank of India said it would raise interest rates in a "calibrated" way given the cash squeeze in the economy and the threat posed by Europe's crisis, Governor Duvvuri Subbarao said June 18.

"It is a matter of time" before the central bank increased rates, said Shubhada Rao, chief economist at Mumbai's Yes Bank.

"The central bank is waiting for normalcy in the liquidity situation before raising rates."

Cash crunch

Indian lenders are short of cash after telecommunication companies including Bharti Airtel paid $14.6 billion in licence fees for wireless phone services and businesses withdrew money for taxes.

The next monetary policy announcement was scheduled for July 27.

The Reserve Bank has increased rates twice since mid-March in a bid to control prices.

Overnight interbank rates advanced to 5.3 per cent in Mumbai yesterday, higher than the repurchase rate of 5.25 per cent at which lenders borrow from the central bank.

"We shall have to strike a balance between these two situations," Mukherjee said, referring to economic growth and the acceleration in prices.

"We are watching the situation," he said. Commenting on any interest rate change would be "premature" the minister said.

India's inflation may slow to about five per cent by March, the finance minister said this week.

The country's $1.2 trillion economy expanded 8.6 per cent in the three months through March from a year earlier, the fastest pace after China and Brazil.

The nation's growth rate may reach "8.5 per cent plus" this year and nine per cent next year, Mukherjee said yesterday.

Expansion in manufacturing and services had "contributed substantially to the higher growth".

Four things that drain your cash

Have you ever given much thought to the real cost of an item, compared to the listed retail price? A perfect example is if you chose to buy a new computer on credit. The real cost of the computer would be the purchase price and the interest that you have to pay.

The true cost of an item can often go unnoticed and consumers end up paying much more than they bargained for. Here are four things that are more expensive than you might think.

Active trading

You might believe that it would be exciting to become a daytrader because you can get rich by aggressively buying and selling stocks. All you have to do is buy an investment and sell it for more than you paid. That sounds pretty easy!

So, should you start actively trading your account in hopes of getting rich? Not if you want to hold onto your hard-earned money. The only person who is guaranteed to get rich from your constant buying and selling is your stockbroker.

Brokerage firms absolutely love customers that actively trade their account. The brokerage firm makes money regardless of whether a stock increases in value or decreases because they charge commissions on every buy and sell order.

You could end up paying thousands of dollars a month in commissions, just for the privilege of trading stocks. Once you see how quickly these commissions eat up your investment return, you won't be in such a rush to quit your day job.

Refinancing

Refinancing theory says you can get some extra cash by taking the available equity out of your house by extending the years on your payments. Sounds great! Who couldn't use some extra cash to pay off credit card debt or refinish the basement? Not so fast!

Refinancing can cost you more than you think. Not only are you extending your mortgage obligation for more years; you are also draining the equity out of your home. As the recent financial crisis showed, housing prices are not guaranteed to increase. When housing prices drop precipitously as they have over the past few years, you could find yourself owing more money on your new loan than your house is even worth.

Late fees

Late fees are like little pests that drain your finances and rob you of financial freedom. Creditors are famous for adding late fees to any bill paid after the due date. Late fees may be added to a bill that is one hour late, one day late or one week late.

Credit card companies can charge high fees for late payments, in addition to the interest. Add these little late charges together, and you could be losing hundreds of dollars a year. Over a 30-year time period, you could easily be losing thousands of dollars to late fees.

Credit card purchases

Credit card purchases should come with the following cautionary warning: This purchase will cost you more than the price advertised! Most credit card users end up paying way more than the stated purchase price. The only exceptions are people who pay their bill in full each month.

Small purchases may not appear to be a big deal initially, but over time these little items will end up costing you more than you think.

Building brands on social networks

Businesses trying to cherry-pick their way through the many social networking sites for their branding campaigns will not find it necessarily easy.

However, it would be better to stick with the social networking sites that have already made it big, as a rule of thumb.

The four obvious ones are Facebook, Twitter, YouTube and LinkedIn. Each differs greatly in their structure and purposes, but businesses have a lot of leeway in harnessing their potential.

According to a survey by YouGovSiraj, 41 per cent of those polled said they interact with their favourite brands through platforms such as Twitter, Facebook, YouTube and LinkedIn.

"Social networking sites work because people want to listen to conversations and contribute to them," said Rick Itzkowich, Internet marketing consultant and vice-president of marketing at VP Productive Learning and Leisure. However, to ensure that it works for them, companies need to define their primary goals they hope to attain from being on such a platform.

According to the 2010 Social Media Marketing Industry Report, social book-marking sites such as Digg and Reddit edged Twitter slightly to emerge tops. Facebook was third, and there was also a prominent placement for LinkedIn.

Businesses that have yet to be convinced should look to Barack Obama and how he ran his campaign. "Obama was a master at using social media for his campaign — it paved the way for winning the election," said Ernesto Verdugo, an internet marketing consultant.

Gulf News looks closely at what the big social networking sites have to offer by way of branding.

Facebook

Companies can benefit from the mass some would say, captive audience Facebook attracts by creating a fan page or corporate profile. By encouraging friends to join, the network is able to expand exponentially through recommendations made by one's friends.

Through these and the fan page, the business is able to market itself to a specific audience while the wall allows for interaction and activity encouraging feedback.

"In Facebook whenever you fill out a profile, you state whether you're male or female, age, the likes and dislikes, political affiliations, etc," said Larry Loik, founder and president of The Real Estate Investor Network and an online marketing specialist.

Applications are another marketing tool. One of the most popular to date is Farmville, which has over 80 million users. Businesses can increase awareness of themselves by creating in-game items that help the user's farm. Users don't see this just as marketing, but as a helping hand in the game.

YouTube

YouTube, the video-sharing website now owned by Google, is one of the most popular networking sites. Putting a video up on YouTube immediately adds to a company's presence, directly and subliminally.

"YouTube can be a very powerful thing, if you know how to use a video camera, you'll be able to have an instant TV studio on hand," Verdugo said. "You'll be able to make and distribute videos to millions of people."

It's about giving the potential customer free information, thus adding value to the product. A lot can be done through video.

"One way to grab your audience is by establishing a news channel that's dedicated to your business," Verdugo said.

"Say you're a plumber you can have a programme dedicated to plumbing and tips showing just enough information for free.

"If the audience wants more information they can click on a link where they can buy a product to get more information," Verdugo added. "The video has to be educational and engaging to a point where you want to have a further look. The more free value you can provide upfront, the more business you can get on the back."

Twitter

While Twitter isn't as popular as YouTube or Facebook — though the Twitterati may beg to differ — it is a vehicle to promote, announce or get a feel of the market and consumer mood.

"One powerful example is when the movie Bruno came out," said Verdugo.

"The first movie, Borat, was an overwhelming success all over the world. On the day Bruno opened in theatres around the United States it was packed as people expected it to be a great success," he said.

"However, it wasn't well received and the audience came out tweeting the message. In one day that film was destroyed."

While other sites are great for building up a client base, Twitter is best used as a search engine or listening tool. "By finding out what people are talking about, you can see the market trends emerge," said Itzkowich.

On the downside, techies believe Twitter is becoming inundated with spam and static and is slowly losing its popularity. "I think Twitter is going to decline little by little," Verdugo said. "The reason is there's a lot of static and spam and people don't really understand the concept."

LinkedIn

While not as widely used as Facebook, Linked-In works well for specific business-related purposes.

"The strategy is different for LinkedIn compared to Facebook LinkedIn is mostly for business-to-business contact," said Itzkowich. "From a business angle it's the No 1 business tool corporate-wise."

LinkedIn is not a sales channel but a relationship channel, according to Itzkowich. If used well, a business can position itself to be at the hub of a network and thus be the go-to platform for someone looking to establish a connection.

On LinkedIn, a search can be done to find everyone who works in a company and what the position in it. From there, information can be garnered on who in your network is connected to the person you need to speak to in that business. Taking it to the next step, one can facilitate a meeting through this.

But Itzkowich throws in a caveat: "LinkedIn is a very slow process. On social media sites you are can either hunt or farm, and LinkedIn has more of a farming mentality. If you're in a hurry, Linked In is not the way to go."

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Now Hotmail in your pocket for free

Microsoft India announced that Hotmail users can get alerts on SMS without GPRS connection and for free, starting today

Hotmail users need to log on to www.mobile.live.com, feed their mobile number and enter verification code received on mobile to get started, the company said in a statement

"With this fun and simple service, you can forget about going to the cyber cafe or logging on to your computer every time you want to check your mails", it said. This service makes checking mails as easy as checking SMSs.

"You can now receive, read and reply to emails on your SMS. The service also enables efficient viewing of emails by specifying the email address/domain from which you'd like to receive alerts on your SMS", the company said.

Out of the 506 million mobile users in India, only 18 million have GPRS on their mobile phones. With email access available only to a mere four per cent of the total mobile user base, 'Hotmail alert on your SMS' "breaks all technological barriers" and helps one stay connected anytime, anywhere. All one needs is a Hotmail/Live ID and a mobile phone, it was stated.

Wider euro debt crisis would hurt India

India's economy would be hurt should the sovereign debt crisis that originated in Greece spread in Europe, Finance Minister Pranab Mukherjee said.

"If the whole of Europe is affected by the debt crisis it will be harmful to us," Mukherjee said yesterday in an interview in Busan, South Korea, where he is attending a meeting of finance officials from the Group of 20 nations.

The European Union is India's biggest overseas market, accounting for a fifth of the nation's merchandise exports. The South Asian nation, which opened its market to foreign investors in 1991, has become vulnerable to slowdowns and financial crises abroad as exports play a bigger role in the economy.

Trade represented 35 per cent of gross domestic product for the year ended March 31, 2008, up from 21 per cent in 1997-98, the year of the Asian financial crisis, according to the central bank.

India's economic growth accelerated to 8.6 per cent last quarter, the fastest pace after China among the world's major economies.

Growing consumer demand is stoking inflation, with the benchmark wholesale-price index climbing 9.59 per cent in April.

Inflation is "an area of concern, but I'm not pressing the panic button," Mukherjee said. "There is a disturbing signal as core inflation is likely to go up."

Core inflation

Core inflation, which excludes food and fuel prices, is currently close to 6 per cent from 1.8 per cent at the end of 2009, Kaushik Basu, chief economic adviser in the finance ministry, said on Thursday.

The Reserve Bank of India has raised interest rates twice since mid-March by a quarter percentage point each time. The bank's benchmark reverse-repurchase rate is 3.75 per cent.

Last month, Subir Gokarn, the deputy governor in charge of monetary policy at the Reserve Bank, said the central bank will pursue a "cautious" pace of monetary tightening because of risks to growth posed by Europe.

The G20 is meeting at a time when the US and Europe are split on the scale and timing of increases in bank-capital requirements, which have been under discussion since governments were forced to bail out lenders, an official from a G20 government said.

Countries such as the US, whose economies are largely financed by markets, want banks to be required to hold more assets on their balance sheets to buffer against future crises, the official told reporters on condition he not be named.

Policy makers in continental Europe, where banks provide more financing, are concerned that too-high reserves risk choking off growth, the official said.

Morgan Stanley cuts Asian currency forecasts

Morgan Stanley lowered its forecasts for Asian currencies, including the South Korean won and the Indian rupee, as Europe's debt crisis saps demand for the region's exports.

"A weak euro and fiscal drag in euroland will impart weaker external-demand conditions for Asian currencies ex-Japan," analysts Stewart Newnham and Yee Wai Chong wrote in a report on Thursday. "We are mindful that if China slows too, this would further soften the regional currency outlook."

South Korea's won will likely strengthen to 1,175 per dollar by year-end, compared with an earlier forecast of 1,050, the report said. India's rupee may climb to 46 and the Singapore dollar to S$1.39 by end-December. Previous estimates were at 43.50 and S$1.32, according to the US bank.

DU TO START VOIP FROM UAE

A service which allows users to make cheap international calls through the Internet will soon be launched by du, the company’s commercial director said.

The service will serve as an alternative to Skype, which is banned in the UAE, and will be the first locally developed voice over Internet protocol (VoIP) service.

It comes after the Telecommunications Regulatory Authority (TRA) relaxed several important restrictions on VoIP in March, allowing the country’s two telecom companies Etisalat and du to begin providing the popular service.

Farid Faraidooni, chief commercial director for du, said full details of the new service will begin to emerge
 in the next two months.

“As soon as the TRA altered its policy on VoIP, we began developing this kind of service,” he told Khaleej Times.

“It will not be free, but then not even Skype is free,” he added. “But it will definitely be cheaper to use VoIP for international calls.

“We will be offering different tariffs based on the subscription of the customer.”Faraidooni declined to say whether or not the service would be available to smart-phone users.

The comments by Faraidooni reflect the first effort by local firms to capitalise on the popularity of VoIP programmes, particularly Skype.

Expatriates looking to make cheap calls to home have traditionally used Skype, which is officially banned yet still remains popular.

While traditional mobile phones charge around Dh1.60 a minute for a peak-hour call to India, Skype offers calls at a fraction of that rate.

Skype CEO Josh Silverman told reporters at the Abu Dhabi Media Summit in March that the UAE’s ban on the VoIP programme was “short-sighted”.

“We think it is in the interest of the residents of the UAE and the Emirati government and economy to allow Skype as almost every other country on earth does,” he said.

Two weeks later after Silverman’s comments, the TRA relaxed its policy on VoIP but reiterated that only UAE firms — including newcomers Yahsat and Thuraya — could provide 
the service.

So far, du is the only local firm to announce it will provide an independent VoIP service.

A spokesman for Etisalat said that there was no update to the company’s policy on VoIP.

UAE's Etisalat in talks with Reliance Communication

Abu Dhabi's Etisalat confirmed it is looking to buy a stake in an Indian mobile operator, after a report that it was in talks with cash-hungry Reliance Communications for a $3.8 billion deal.
Buying a stake in India's second-biggest mobile operator would give Emirates Telecommunications Corp or Etisalat, a vital presence in the world's fastest-growing mobile market, where it owns a stake in a start-up telecoms firm.

For Reliance Comm, controlled by billionaire Anil Ambani, this would bring in much-needed funds, especially as the company is caught in a margin-destroying price war and is paying billions of dollars for next-generation licences.

Reliance Comm, one of the worst performing shares in Mumbai's 30-share index so far this year, closed 11 percent higher on Wednesday, while Etisalat stock was down 0.5 percent.

K.K. Mital, head of portfolio management services at Globe Capital in New Delhi said: "Not only Reliance Communications but some other players will also be looking at selling some stake to raise funds to cut debt." "Players like Etisalat are looking at long-term opportunities of the Indian telecoms market despite the short-term pain due to competitive pressure," he said.

India has more than 600 million subscribers and nine of the fifteen operators already have foreign partners. Reliance Comm is the only big telecom firm not to have a direct foreign stake. Call rates have slumped to as low as 0.4 U.S. cents per minute in the world's largest market after China.

Etisalat's Chairman told Reuters his firm could decide within weeks about a deal in India. Reliance Comm said it has been receiving proposals from time to time from international telecom companies expressing interest in acquiring a strategic equity stake in it.

The Times of India newspaper said the Gulf region's biggest provider of telecoms services was in advanced talks to buy a quarter of Reliance Comm for 180 billion rupees ($3.8 billion). The market is currently valuing the Indian company at about $7 billion. The stake sale could mean a change in strategy for ambitious Ambani, who made several smaller acquisitions to expand his firm overseas, and in 2008 set his sight for a tie up with South Africa's MTN in an ultimately thwarted deal.

Last month, Anil Ambani ended an agreement not to compete in businesses with his long-estranged brother Mukesh, which also frees him to bring outside investors into his firm. A person close to Reliance Comm, who declined to be identified, said the report was speculative.