By Nuraishah Hanani
Achieving financial stability sounds like a lot of work. But, with good planning and the right mindset, you are set to go!
Today’s women are juggling between high-pressure work environments, a fast-paced social life, and simultaneously managing the family, which can sometimes makes money management take a back seat.
One study shows that only 20% of women take lead themselves when it comes to financial decision while the rest let their spouses take the lead. While another study also shows women vs financial planning that only 42% have set investments goals either it is for retirement, family, travel, emergency funding, or other prioritize.
All this studies shows that women invest too conservatively, don’t save enough for retirement, whereas nearly 1 in 5 working women have nothing saved for retirement other than their EPF contributions, lack confidence, and are less knowledgeable than men when it comes in financial life goals.
Financial planning is an integral part of achieving our financial goals. We don’t assume that what is safe now would be safe in the future. It also creates ways for us to protect our wealth now and in the future through a process of financial planning that takes into account all aspect of our life.
Step 1: Educate yourself about complex financial decisions
Today, being financially literate is not a choice but a necessity. You can start by understanding and look into your personal or your family financial management.
Look into your monthly cash flow which it should be consist of personal saving, family saving, personal expenses, and family expenses. Once all figures have been segregated to different categories it’s easier for you to control, budget, and make any decision when it comes to financial needs or opportunities.
As women always tend to mixed up their personal needs and putting family first in life decision; with a few money management exercises, a financial mistakes can be avoided thus help women more hand carve and secure a financial future for themselves and their family.
Generally, women tend to lack confidence around money and that stems from a lack of knowledge surrounding their finances, even though they are “super smart” with great careers.
To be clear, to be financial independence is not about how much money someone has. It’s about making good decisions with the money they do have.
You can read Financial Knowledge You Need To Know before starting with your personal finances planning.
Step 2: Having a MUST contingency reserve of six months expenses
Having a sufficient emergency fund is a must in the financial planning. Have a liquid fund of at least six months of living expenses for any unexpected financial bump can help you achieve peace of mind.
One of the reason why you should build your emergency fund as a part of your financial plan, as that will be a prevention or stop adding to your debt in every financial bump in the road.
That fund can cover the unexpected things you don’t budget for, like car repairs, medical cost of you or your family.
Facing those crucial times with sufficient emergency funds will help you to handle those stressful events and make it easier for you to stay focused on getting out of debt and have better control on your financial outflow.
It is common that people without an emergency fund for any unexpected financial blow will end up racking up more debt – obtaining new bank loans, borrowing from family or friends, or even using a credit card – to cover the financial demands of an unexpected emergency. All these options only bring them new debt or unplanned future financial commitments.
Step 3: Believe in your unique characteristics
We as women are seen as more compassionate, thoughtful, and open-minded.
While managing money in the midst of life’s other priorities is no easy task, with women of all ages and backgrounds trying to balance our role between the pressure of working and taking care of a family and at the same time needing to plan for our own retirement. Even though some of us may not directly participate in generating family income, however we can’t deny that indirectly,women are backbone of family financial decisions and management.
These factors can be used as our advantage in making financial decisions that don’t allow us to lose sight of the things we most value. For most women, investing isn’t just about making money. Women tend to do more for the people they care about so this is a major consideration in making their financial decisions. That is why in every informed financial decision you make should take you closer to your personal goals IF they are aligned.
The keys is to believe and understand your true self and know what are your financial goals, when and how much you need to achieve your financial life goals.
Step 4: Figure out your end goal
One of the crucial part in constructing a holistic financial plan is, to know what your financial life goals are. For that, the most fundamental building block begins with knowing your current financial status. Only then can you proceed with figuring out how, where, when, and what needs to be done to achieve your financial life goals.
We women have a lot on our plate and sometimes, the goals would be mixed up between our personal dreams or a dream for our kids or even family. It is important to take one step back and think what is our end goal in our lives.
This is because, without knowing our financial destination and with a lack of financial knowledge may cause women to be very conservative when they invest. We tend to fear that we’ll lose money if we become aggressive. Yet, women need to be more forceful because of the wage gap in the market and because we are generally are facing a longer lifespan than men. When it comes to investment, the best advise will be, the earlier you start, the less you need to save, because compounding does a lot of the work for you.
With that fact, we should be more aggressive and be more open for any financial discussion and talk about financial with our spouse, family and friends regularly on how to achieve your financial dream life and how you can make it turn to be a reality.
Step 5: Start the financial planning journey with the help of an advisor
Last but not least, with all above steps, the most important one is looking for a right financial planner or advisor who will take the time to understand their clients’ goals, passions and concerns.
Today, while everyone can claim as an expert and giving an advise, however when it comes to financial, you must ensure that the one whom giving an advise is a really certified and licenced by the regulators in financial aspect . For example, a licence financial planner or advisor must have several qualification and certification by regulator such as Bank Negara Malaysia (BNM) and Securities Commission (SC) before they can give their advice with holistic views and advice in term of financial aspects.
A good advisor is proactive, will invoke confidence and motivate while keeping their clients calm through the market’s ups and downs . He or she will shape a financial plan that will take into consideration and meets their client’s unique needs and goals.
You may differentiate one financial planner with an agent from any company by how the financial planner will take a look at your current financial situation – your assets, liabilities, cash flow as well as take into account your financial goals, risk exposure and the return on investments (ROI) for your investments. Then, we will take a look at your future financial expectations such as your future cash flow and income growth potential to managing your financial gaps while an agent have limited expertise in what they are doing.
A single qualified financial planner should be able to develop your holistic financial plan which consist of all aspect in financial areas such as investments, risk management & insurance, goals planning (retirement, education funding etc), estate planning, debt management, tax planning, and Zakat payment. Then only can your holistic financial plan be built based on your personalized financial navigator that tells you where you are today and how to get to your intended financial destination.
Women generally are more open looking for help when in need and in any areas that they lack know-how in.
Studies have also shown that women are more prone to follow any advice that are given to them. The best part why women need to seek the right advice from a certified financial planner is to ensure that whatever advise given are the best for their situation.
When you have your own financial planner, they will also build your financial plan based on your needs based analysis. Such as to determine the right amount of coverage that you and your family needs and to identify the right type of product to manage that need. A financial planner also ensure that you will only be paying for what you need, nothing more and nothing less. This will ensure that if anything were to happen to you and your family, we can minimize the financial related stress with effective wealth transfer.
That will differentiate them from most sales people and agents that only interested to sell you a product without even knowing your financial situation or aspirations.
So what stop you from makes an appointment with a financial planner today?
Interested to engage with a financial planner for better financial planning?
Go to Contact Us for enquiry.
What action have you taken towards achieving financial stability? Share with us in the comment section below.