Guest Column: Empowering women with financial freedom
Financial independence is a journey, not a destination, it implies saving and investing with a long-term strategy while staying committed to it
It’s never too late to learn and take control of your financial future. Finance is a pursuit seen to be male-dominated. It’s high time women equip themselves with information to streamline their financial knowledge.
Financial independence is a journey, not a destination. It implies saving and investing with a long-term strategy while staying committed to it. It refers to a state in which one has accumulated enough financial resources to cover living expenses and to maintain a desired lifestyle without relying on others, particularly post-retirement.
Many ask, are homemakers financially independent? Yes, if the homemaker is budgeting, cost-cutting, saving and investing, she is financially independent.
It’s believed that when women save money, they do it to buy jewellery. This is mistaken as money spent instead of money invested. Gold is a storehouse of value and a hedge against inflation, making it an attractive investment for women.
Make your savings earn for you by discovering the power of financial literacy. Financial literacy is the knowledge, skills, and understanding of financial concepts and practices tailored to our needs. There are many ways to invest other than fixed deposits, such as gold bonds, systematic investment plans (SIP), NPS and mutual funds. Here are schemes women should know of:
Sukanya Samridhi Yojana: All girls below 10 years should have this account. Its rate of interest is 8% and one can deposit a maximum of ₹1.5 lakh per annum, which is eligible for deduction under Section 80C. One can deposit only up to 15 years and the proceeds and interest is tax-free. To break it down, if one deposits ₹1.5 lakh each year for 15 years in the SSY account, at the end of the maturity period (21 years), the young woman will get ₹65.93 lakh, tax-free.
Reverse mortgage: Each one of us wishes to live our silver years in the comfort of our home without having to let go of our dignity. But not all of us will have pensions. The solution is reverse mortgage. It is a great way for senior citizens (those above 60 years) to receive some funds if they’re short of liquid cash and they have a property in their name. The most appealing feature of reverse mortgage is that the borrower is not required to repay the loan. She can continue to live in the house. After the borrower’s death, the bank can sell the property or wait for a legal heir to repay the loan amount and take back the property.
Sovereign gold bond: SGBs are government securities denominated in grams of gold. The minimum investment in the bond shall be 1 gram with a maximum limit of subscription of 4kg per annum for individual. The risks and costs of storage of physical gold are eliminated. The bonds bear interest at the rate of 2.5% (fixed rate) per annum on the amount of initial investment. The interest is credited bi-annually. Though the tenure of the bond is eight years, early encashment is allowed after the fifth year from the date of issue. The capital gains tax arising on redemption of SGB to an individual has been exempted.
Financial transparency
Collaboration between spouses is essential for financial transparency. Maintaining joint custody of crucial documents is a responsible approach to ensure that important information and paperwork are accessible and organised for both. Here’s a list of essential documents on managing joint custody:
*Personal identification and legal documents: Passports, Aadhar card, driver’s licence, birth certificates, marriage certificate, PAN and ITRs.
*Financial and property documents: Bank account information, deeds of property or vehicles, insurance policies, mortgage and loan documents.
*Estate and wills, including power of attorney documents
*Health and medical records: Health insurances and medical records.
Guidelines for joint custody
Centralised storage: Keep all documents in a centralised location, such as a lockbox, safe, or a designated folder that both individuals can access.
Organise and categorise: Arrange documents in categories to facilitate quick retrieval.
Regular review: Set a schedule to review and update the documents.
Inform a trusted individual: Make sure a trusted family member or friend knows the location of crucial documents in case both of you are unable to access them.
Digital copies: Consider storing digital copies of documents in a password-protected cloud storage account.
Nomination in bank lockers, bank accounts, demat accounts, insurance policies is not mandatory, but it is strongly advised.
aartibansal@msn.com
(The writer is a Panchkula-based chartered accountant. )
