Last Thursday, we talked about women and financial independence. This week let’s talk about how all women, earning or non-earning, can gain awareness of the family finances and empower themselves.
Though a woman may not be contributing towards the family income, she should still be aware of, and involved in the family finances. The first step towards this is to acknowledge that any income is the family’s income and not just the breadwinner’s.
This, of course, requires understanding and cooperation among spouses, and may even require a change in mindset or way of thinking.
Once you view both spouses as a team working towards common goals, it shouldn’t make any difference as to who earns the income, or who takes care of the household, or whether it’s a combination of working outside, as well as within the home. Both partners do their share and split the workloads to the best of their abilities.
Get your financial bearings
For those who are interested in a better understanding of their finances, here are some guidelines that can help you get started.
1. Daily expenses
Tracking daily expenses plays a big role in managing finances, though it requires one to make a habit of entering expenses regularly, preferably daily.
There are many tools/apps available for this; some even read your transaction alert SMS and automatically add it to your expenses.
You can also enter expenses in an Excel sheet. Though the old-school diary works perfectly fine, searching for previous entries could be a task.
2. Monthly bank balance
In case you are not regular in keeping track of daily expenses, this is a good way to track overall monthly expenses.
I personally use an Excel sheet to note the monthly bank balance at the start of every month, and also the salary/income that comes into the account on a monthly basis. With this information, I can calculate how much was spent each month.
At the end of the year, it enables us to look back at the months with the highest expenses and analyze the reasons (it could be high when insurance premiums or other investment draw-downs are due, or due to big expenses like vehicle purchase/servicing, home repairs, etc).
This also helps in analyzing whether there is a surplus or deficit in the account after the month’s expenses. If you observe that overall, your expenses are higher than the monthly income, you can take steps to either increase the family income or alternately reduce expenses, wherever possible.
If there is a surplus after expenses, discuss together on what to do with it, whether to invest or spend, where and how much to invest/spend (a big purchase/vacation/self-development/..), how much goes to both sets of parents/family (if required), etc.
3. Bank details
Make a note of all the bank accounts, credit cards, etc in your spouse’s as well as your name. This comes in handy if you lose/misplace your purse/wallet.
4. Life insurance policies
Know the premium amounts, due dates, the sum assured, premium payment term, policy term, pay-out dates, etc. of the life insurance policies of all family members.
With multiple policies under different family members, it can get difficult to keep track and get an overall picture of all your policies. A visual representation makes it easier to understand.
We use basic Excel to give us a visual summary of our policies.
5. Non-life insurance policies
Track the premium due dates, premium amounts, policy term and sum assured of all the non-life insurance policies too like health insurance, vehicle insurance, home insurance. Set reminders so that you do not miss renewal dates.
6. Where is your money?
It is essential that both spouses are aware of where the money is invested, such as fixed deposits, mutual funds, equities, stocks, etc.
Both spouses should know where important documents and assets are kept, such as jewelry, keys, passports, PAN, Aadhar, voters ID, driver’s licenses, medical records, birth and marriage certificates, school and college certificates and mark lists, loan papers, tax documents, property deeds, insurance policy documents, investment papers, vehicle papers, safe-deposit box/keys, cheque leaves
Add your spouse’s name as a nominee in all places applicable. This includes bank accounts, insurance policies, investments, etc.
9. Emergency fund
Don’t forget to set aside some money solely for emergencies. You can keep the amount in a flexible fixed deposit from which cash can be easily withdrawn when required.
Knowledge of the above aspects helps you to plan better for your goals and future. Financial awareness and participating in the family’s financial decisions also boosts the self-confidence of stay-at-home-wives and -moms. After all, knowledge is power!
Now, do not worry if you feel overwhelmed by the above list! A good place to start would be the monthly or daily expenses. After that, move onto the next point that’s easiest for you. Take it easy and learn a little every day.
If you need any help or inputs regarding the mentioned points, please feel free to ask in the comments section
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DISCLAIMER: The opinions expressed in this post are the personal views of the author. They do not necessarily reflect the views of Aweekinlife.com. Any omissions or errors are the author’s and A Week In Life does not assume any liability or responsibility for them.