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".