Being a homemaker can be rewarding but challenging. You are a master chef, a manager, a teacher, and a caregiver rolled into one. If calculated, that makes work worth Rs 33,227 per month. But most homemakers often miss out on one of the most essential duties — financial planning- either because they think it is not their domain or they do not have enough time or knowledge.
In the 21st century, financial planning is an essential skill as it makes you future-proof and prepares you for any challenges life throws your way. Plus, with the right strategy, your money can grow multifold. For example, it has been found that the average Indian homemaker saves anywhere between Rs 100 to Rs 1,000.
Let’s consider an average of Rs 500 over five years. The total amount saved would be Rs 30,000. But if it had been financially planned, this money would have seen 12% of annualized growth, making it Rs 41,243. So, by just keeping that money in your locker, you might lose an opportunity to grow it.
To help you start your investment journey, here are some tips on how homemakers can plan their finances smartly and secure their future.
1. Note all those expenses down
Every homemaker does budgeting, but if you are a homemaker, you may find yourself in a position where you don’t know where all that money goes. The first step to financial planning is tracking all your expenses in your head and putting them on paper or a spreadsheet.
Looking at it will show you where you are wasting money. Knowing your expenses can help you set a realistic budget for your household expenses and save a lot of money.
2. Have an Emergency Fund
An emergency fund is a savings account that you can use to cover unexpected expenses, such as medical bills, car repairs, or home maintenance. Having an emergency fund helps you avoid taking loans or using credit cards, which can lead to debt and interest payments.
Ideally, you should have at least 3 to 6 months of your living expenses in your emergency fund. You can start by saving a small amount monthly and gradually increasing it as your income grows. You can also use windfalls, such as bonuses, gifts, or tax refunds, to boost your emergency fund.
3. Don’t Just Save, Invest!
All homemakers have their private bank, which is safer than any vault. There are many dabbas, nooks, and crannies of every house holding lakhs of rupees. Although they might be safe from thieves, it is slowly reducing, as someone is sneakily pulling money out of them. It’s inflation.
As inflation increases, the value of your money’s value decreases. So, you must invest it in funds that beat inflation, like gold or FD, and if you are willing to increase your money’s value and are ready to take risks, you could invest in mutual funds and stocks of reputed companies. Doing so will help you grow your money over time.
4. Safeguard Your Future
Many homemakers do not think about their retirement, as they assume that their spouse or children will take care of them. However, this can be a risky assumption, as life is unpredictable, and circumstances can change. You may face situations such as divorce, the death of a spouse, or estrangement from children, which can leave you financially vulnerable in your old age.
You need to plan for your retirement and save for it. You can open a retirement account, such as a PPF or NPS, and contribute regularly. The sooner you start saving for retirement, the more you can benefit from the power of compounding.
5. Get insured
Another important aspect of financial planning is to protect yourself and your family from unforeseen events. You need to get adequate insurance coverage for your health, life, and property. Health insurance can help you pay for medical expenses, life insurance can provide financial security to your dependents, and property insurance can cover the damage or loss of your assets.
You also need to make a will, a legal document specifying how you want your assets and liabilities to be distributed after your death. A will can help you avoid conflicts, disputes, or litigation among your heirs and ensure your wishes are respected.
Financial planning is not only for working professionals but also for the homemakers who play a vital role in managing the household and the family. By following the tips above, homemakers can plan their finances smartly and achieve their financial goals.
If you want to take your financial planning game up, consult a financial planner; they’ll help you draw a foolproof plan to safeguard your future. Remember, it is never too late to start your financial journey. So, take charge of your money and make it work for you.
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I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.