5 Mantras for the Financially Independent Woman

If you are an earning member of the family, you must avail of life insurance to ensure that your financial milestones will still be achieved in the event of your demise. Irrespective of whether you earn or not, you should also hedge your health risk. As the pandemic has shown us, a single major medical expense can crush your financial goals. Opt for sufficient health coverage as soon as possible to protect your finances.

You must define and enumerate your financial goals, and all your investments should align with these financial goals. Do not forget to include macro factors like inflation and real interest rate when evaluating your goals. Also, remember your own needs and plan for personal goals such as retirement, upskilling etc.

If you are burdened with EMIs, it’s time to reduce your overall debt. Consolidating debt will help you in the long run. Start by paying off debts with high interest rates, routing the EMI savings towards your investment goals. 

The pandemic has shown us the value of emergency funds, as countless people have dipped into long-term investments to pay for medical bills or tide over job losses. While the going is good, build an emergency fund for such unforeseen crises. The quantum of the fund would depend on many factors including job stability and the macroeconomic scenario - but as a rule of thumb, try to set aside 6-12 months’ household expenses if you’re in a relatively stable job. 

A common mistake that many of us make is putting all our money into a single investment avenue that we are comfortable with. It’s important to diversify to optimise your returns and reduce risk. Combining negatively correlated investments reduces the overall risk of the portfolio by helping you weather different market phases without hurting your returns. A healthy financial portfolio should be a good mix of assets catering to your financial goals, asset allocation preferences and risk tolerance.