Hello Moms! This is our part 2 in the Millennial Mom series. I am sure you recall our first one was The Media Mom.
To get started, I remember a discussion that dates back in time when I was a salaried employee. I was discussing my tax plan or rather the lack of it with another female colleague. I thought I was in pits as far as my investments were concerned, but to my utter surprise, my friend said that she has never made a single investment on her own. “There is something done by her husband on CA’s advice”, were her words. At that point, we were joined by another team mate and a senior, and the all women’s team shared their investments. A 5 year FD and real estate respectively were spoken of as their investments. But when asked, why these instruments, for what time horizon, what would be their future money requirements be like, these questions drew a blank.
Now, Moms let me profile these women. Working millennial moms, married to high pressure jobs, over worked most of the times, all very well paid. Academically, management degree holders, fitness lovers, keen readers, well turned out, well travelled, conscious eaters and aware parents. Wouldn’t you expect them to be on top of their finances? But here’s the truth, they may have been HNIs along with their spouses but they were clueless about wealth creation.
Just like my colleagues, there are many millennial moms who have high disposable incomes but lack of awareness, interest and time add up to their financial ignorance.
So there! We are sharing investments that the uninitiated can consider. These are overall recommendations which can aid in wealth generation and tax planning. However we do encourage our Corporate Mom to take help of a professional financial planner.
Emergency Fund: This is a critical element that we all must pay heed to. All the planning may go for a toss if we don’t keep an accessible emergency fund. Keeping all the money invested with a long term view may not be the best idea since exigencies can come down as a hard reality.
You should consider your 3 to 6 months expenses in emergency fund. If you are savvy about growing your money, then you can park the emergency funds in short term debt funds.
ELSS Funds: Equity Linked savings schemes are an ideal tax saving tool which can give better returns than traditional tax saving schemes. These are essentially tax saving mutual funds that come with a 3 year lock-in.
PPF: For those who are risk averse can invest in PPF for its tax efficiency but declining interest rates are definitely playing dampener on the returns. Plus a 15 year lock-in is a long enough horizon to get above-moderate returns from market linked products.
Mutual Funds: The equity markets have been climbing charts for the last few years. MFs have also been doing well therefore. Since MFs are professionally managed by a team of experts, they can be the best vehicle for working people. You don’t have to monitor market movements everyday basis.
New investors with a long term horizon should start with large cap funds or balanced funds.
The most preferred way for the salaried is Systematic Investment Plan better known as SIP. We will speak about it in detail in a following post.
Term Insurance: An important part of financial literacy is life cover. However due to misspelling and ignorance, it is not emphasized enough. Term Insurance is the protection that all income generators should take to cover for their lives in case of any uncertainties. It is a must for the Corporate Mom who makes a crucial contribution to household income.
In addition to above, working moms can also invest a small portion in Gold ETFs or if keen, then dabble in Equities with a long term view.
In the end, all we can say is investments don’t take as much time as we think. Moms and all women should consciously take steps towards investing. Remember Earning for Spending is not the deal, Earning for Growing is.
We wrote about Millennial Moms yesterday, and we know the millennials are all about experiences than acquisitions. We came across a great piece on Millennial women setting out their #lifegoals and living them up.
Have you often caught yourself saying, “Life’s one heck of a bitch right now”. Finding your plates too full or sometimes too much to juggle between – you must be a Millennial Mom.
Millennial Moms have unconventional jobs, role demands, work schedules, and therefore a much higher need to be financially savvy. We are doing a series on how Millennial Moms with varying roles should be dealing with money. Here’s the piece for our first role.
Role 1: Moms who run the Media
Graphic Designers, TV anchors, Executive Producer, Creative Directors, Director of Photography… These mom’s have challenging careers and work differently from regular employed workforce. The work comes in erratic shifts, for days at a stretch sometimes and sporadically.
Most times work comes on assignment basis in the creative field. While the pays are handsome, the receiving g date is not fixed like the salary. How can one then make the best calls in managing money. Here’s a practical guide.
Pay yourself first
Freelancers are very much like the entrepreneurs. It is important to reward yourself to keep going. Take aside your salary to last you your next expected payment before you use it up in clearing the dues.
Use apps to track your payment or follow ups
A hard part of freelancing is deferred payments which you have to diligently follow up. The right apps can keep reminding you for follow ups and keep a note of your money reserves vis a vis expenses.
We can’t stress more about the need of emergency fund for everyone and its even dire if your pay-checks are irregular. Emergency funds can be limited for salaried individuals who have medi-claims and other cover. But it’s critical if you are independent.
Using the upfront payment mode
When making large purchases like car, camera and heavy equipments, prefer to use the upfront payment option. Since you can time the purchase after a big payment credit, paying lumpsum will earn you rewards like bigger discounts and cash backs. You also avoid the EMI headache and heavy interest rates charged on taking loan.
Don’t compromise on Investment
Not having regularity in payments should not become an excuse to not invest. Make lumpsum investments if recurring is not possible.
The financial terms may scare you or you may be very busy to figure the investment tools. Also in freelancing, there are no employee benefits like PF, Gratuity etc. you must engage an advisor to plan your insurance, retirement and other investments.
Get a life cover
A lot of people misunderstand Insurance as an investment tool only. While it can give returns but primary use of Insurance should be of covering your life. Absence of life cover and medi claim can land you in quite a spot in case of any uncertainties.