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Financial Empowerment November 3, 2006

Filed under: Management — togetherwebond @ 9:59 am

As educated women most of us are financially independent before marriage. Unfortunately in the haze of romantic bliss or to fulfill conservative stereotypes we hand over our financial resources to our husbands or in-laws soon after marriage. I have seen and experienced first-hand the outcome of such foolish decisions. There have been a few instances where I found my debit card missing only to find it later, with all money removed from the account. I have found myself penniless and scared in a strange city after having been thrown out of the house for the umpteenth time. Instances like this have made me a little wiser about retaining my financial freedom. After all even if money can’t buy you happiness it certainly helps you find the path to happiness. In my case completing my education, moving out of the city where I lived as a married woman and now money to help me fight divorce cases in courts.

Some of the simple things to remember:

**SAVE. It is never too late to save. At least save 10-15% of your monthly income in a Recurring Deposit or open a Simple Investment Plan with any of the banks wherein the bank invests your money in mutual funds. For both these schemes, there is no lock-in period so you are free to withdraw the money in case of an emergency.

**Never share a joint account with your spouse. If you plan to share a joint account do so only for the purpose of meeting the monthly household expenses. The rest of the money should be in your single account.

**Always get yourself a life insurance and do not nominate your spouse until you have been married a few years at least, preferably five years and more.

**Always make a will and it is never too early or late. This may sound morbid but it is always important to make a will. Even if things are going smoothly you never know when it might go downhill. So make a will and bequeath whatever assets you have to whomever you want to be the beneficiary. Once again, do this in a level-headed way not clouded by emotional sentiments. You will probably spend Rs.1000 if you want it done by a lawyer. Or you could write one yourself and have two witnesses attest it.

**Do not share pin numbers of debit or credit cards.

**Always share the household finances jointly unless you are extremely sure of the person you are with.

**Try and buy a house early. Get a home loan. With so many banks, both retail and public sector banks more than willing to give loans to working women do it as soon as it is possible. And banks like HSBC, IDBI and UTI even go far as extending a 90% home loan.

**Try and invest in as many savings instruments as possible. NSC certificates. If you are employed increase your contribution to the Provident Fund account.

**Get yourself and education. Learn new skills and spread your knowledge base. You never know when education will land you a better job.

**Always have a passport. If you don’t have one get it made immediately.

Here are some rules of financial freedom I came across in Forbes magazine which might be of help. And remember most of it has to do with common sense.

You need enough life insurance to replace at least five years of your salary – as much as 10 years if you have several young children or significant debts.
Life insurance lets surviving family members maintain something close to the standard of living they enjoyed prior to you or your spouse’s death. Stay-at-home spouses also should have life insurance, since they do all sorts of things that you would need to pay someone else to do in their absence.

There are two types of policies:
Cash-value: These cover you for your entire life and includes an investment component.
Term: These cover you for a specific period of time and provide a death benefit only.
For most people the choice is a no-brainer – the premiums on a term policy are much lower

When you buy insurance, choose the highest deductible you can afford. It’s the easiest way to lower your premium.
It’s the open secret of the insurance game: File a claim, your premiums go up. For that reason, it’s in your interest – as much as possible – to shoulder small damages out of pocket.

If you’re not saving 10% of your salary, you aren’t saving enough.
The earlier you start saving, the less you’ll need to set aside every year to meet your goals. That’s because you allow your money more time to grow — the gains on your invested savings will build on the prior year’s gains. That’s the power of compounding, and it’s the best way to accumulate wealth.

Saving at least 10% of your annual salary for retirement is recommended, but the older you start saving, the more you’ll need to save. If you start at 50, you may need to put away 30% a year and still postpone retirement by a few years.

Keep three months’ worth of living expenses in a bank savings account or a high-yield money-market fund for emergencies. If you have kids or rely on one income, make it six months’.
An emergency fund is a hassle to build, but you’ll be glad you did next time your transmission sputters or your boss hands you a pink slip. Besides curbing spending where you can and setting aside a small amount of your pay every two weeks, there are several ways to build your cash cushion. Some sources to draw on:
*A bonus or financial gift from a relative
*Money you get back from a flexible spending account, a transportation reimbursement account or an insurance claim.
*An extra paycheck. If you’re paid every two weeks, you’ll get 26 paychecks a year. So in some months you’ll get three instead of two. If your fixed monthly expenses don’t change, you might be able to set aside one paycheck a year.

Aim to build a retirement nest egg that is 25 times the annual investment income you need.
So if you want $40,000 a year to supplement Social Security and a pension, you must save $1 million. This rule is based on the amount that you can safely withdraw from your nest egg in retirement.

The single most effective thing you can do to ensure that your money will last is to start out with a low withdrawal rate of 4 percent, then raise that amount annually to compensate for a cost-of-living increase or inflation.

The reason is that if a bear market hits early in retirement, an enormous loss can put such a big dent in the portfolio that it won’t be able to recover in time to benefit when the market rebounds.

By Jamais Moi Meme


13 Responses to “Financial Empowerment”

  1. Vishalakshi Says:

    Very nice article….. very helpful…..

  2. Prakruti Says:

    Hi Jamais
    That is brilliant. That is what I tell my kids as well. Start savings early in life. No one told me that and by the time I started it was not the ideal but something is better than nothing.. It just takes more effort now..

    Money should work for you and not you work for money is what someone told me once!!


  3. Reese Shindurling Says:

    A looming divorce can be stressful on anyone and in the heat of the moment people who once shared love and respect can do terrible hurtful things to each other. If care is not taken during this stressful time, divorcees can find themselves in hot water later on down the track, worse still it is possible that serious damage can be done to an individual’s credit rating. There are resources available on how you canProtect your credit before the divorce.
    I just did.

    Have a great day!

  4. Iturkarp Says:

    After such a long time, I find this artcle so useful for all women hwo married ro Divorced anf even single to follow to the syllable! Good job. That is what I liek about this group of women here. This site is not just about lamenting abusive husbands but how to come out sucessfully in life on your own! Great ideas here.
    The best I like is “buy” your house on loan at least NOW. I did when I was just entering a job many years ago and now it is worth so much, I can’t even rent it!

  5. PurpleA Says:

    Great tips Jamais

    I liked the ‘buy the house’ tip too. Very essential. In this whole wide world some place to call our own.

    It is my goal too….hopefully soon I shall achieve it and will invite all of ya to the housewarming party.

  6. Prakruti Says:

    Agree completely.. a house is not just what money can buy and made of brick and stone.. its my refuge; a place to go and rest my tired limbs, and close weary eyes; feeling safe, warm and to belong!!

  7. SriPriya Says:

    Thankyou Jamais Moi Meme for this financial empowerment. It will give me lot of help for my divorce.
    I will apread this to all women in my group.
    Though I am unable to buy home now but I believe with your small tips provided it shall go for great cause. I will never forget the tips.
    Take care.


  8. Iturkarp Says:

    Hi Sri Priya: Re: Buying a house: It is almost similar payments (other than the down payments for a mortgage) each month when you pay rent rent Vs monthly mortgage payments. My first Town house I bought, when I had my first job for just 2 years, on mortgage doubled in value, while I paid the same $550 PM as mortgage for 7 years ( the renst went up to over $850 PM in the mean time) to sell it at 100% profit and move on to a bigger home. Think about that!:-)

  9. SriPriya Says:

    Thankyou very much Iturkarp. I will remember this tip and share it with all women in my group.
    My situation here is different in NJ is verybad as the mortagepayment for two BR is $1700/- and rent is $1300/- but definitely within 10years the rents will be always increasing and if you lockin your mortage paymnt it will be same unless you fall in default with late payment etc. I love NJ and NY but realestate is buyer market today and for me buying is not right choice as of my finacial status and other concerns. I pay rent here but do have own home in India which I titled in my little gals name who is a minor now but has a legal guardian appointed. This is bcoz of my estranged husband and their family needed my daughter’s home to be for them. I thankyou for the kind help by one of our nice Attny friend who suggested the above to prevent this. So finally I feel homeless globally(not really as I pay lot of rent now)but yes my kin has a nice place for home in future. I will remember your tips as I am rebuilding my broken self.

    Thanks a lot,

  10. Iturkarp Says:

    You are welcome Sri Priya. I am hopeful that you would find strength and courage to face the situation single handedly. I was not aware that you are also in USA (such a small world)as it is very affordable (I know you have difficulties right now both emotional and financial) in USA and the most interesting feature in investing with less than 5% down payment for the first time buyer in USA is that the investment grows to an astonishing pace for our 5% or less investment as paying rent is very expensive proposition. I am a CPA and can give some suggestions to this group like the one that given above by Jamais Moi Meme. Each one of the suggestions is valuable and every one should put them to use keeping it as a goal. Best Wishes.

  11. SriPriya Says:

    Thanks Iturkarp. I welcome your suggestions. I am very proud of you. I am not very good in Math. I always need your input. I am just a phone call away.


  12. Iturkarp Says:

    I am sending my first piece on “positive Thinking” today to the Administrator as requested.

  13. SriPriya Says:

    Hi Iturkarp,
    It was a great pleasure to talk to you today. Yes please check Asian Women Safety Net for more survivor responses. Yes we are a 80plus more volunteer team in our group now. We come from different backgrounds Indian, Korean, Pakistan, Bangladesh and Middleast. So we got our name for the organization as Asian Women Safety Net or AWSN. Our services go out to many women who dont want to go to American Organizations because of immigration concerns, language barriers, Cultural history etc etc to name few. We understand all our women and their difficult situations. We speak all Indian languages and also we have Korean voulteers too who can help Chinese women. We are a project of NJCBW(New Jersey Coalition for Battered Women). We are women’s group and still have men supporters in our group. The AWSN website was launched recently by a male volunteer. The founder of our group is Attny Seema Singh a State Attorney working for NJ. We had overwhelming responses from lot of people recently during the DV month of October.
    Please let us know how you can help us and we welcome your best inputs which may go for great cause.
    To contact our office please visit our website for more info.


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