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Women & money

LONG-term financial planning is increasingly becoming an important issue for women for the simple reason that women tend to live longer than men, often by 10 years or more. Living longer however also exposes women to a greater risk from illnesses that commonly afflict them in old age, such as osteoporisis and arthiritis, which could result in costly medical bills in the future.

Yet, few women are actively engaged in ensuring that their long-term financial needs are taken care of. Certainly, because of obligations to care for their families, and for those who work, the demands of having a career, women tend to push financial planning to the back burner. And let others worry about it.

Arising from this, many are unprepared should they suddenly lose their partner, or become divorced, to handle their long-term financial affairs. As such,when it comes to money, women should become more involved beyond just managing the family's monthly budget, which is typical for many Malaysian households. This will help them to be better prepared financially should the unexpected happen.

How will having a financial plan help you? Firstly, it will help you to figure out your life's priorities. How do you want to live in the future once your short and medium term financial needs are taken of? How much money will you have left over to live the life of your dreams after taking care of things like saving for your children's education, owning a home and caring for elderly parents? If what you expect to have falls short of your needs to live comfortably as you grow older, how do you create wealth from your present income to achieve those goals?

As important, how do you protect yourself and your family should you or your partner lose regular income due to an accident or prolonged illness, as it would affect everyone's future wellbeing?

Having a financial plan will also help you to be better organised. For example, do you know where important documents, such as insurance policies or the deed to your home are kept? Have you updated the list of beneficieries in your insurance policies and EPF account? An estate plan, which is an essential part of financial planning, that is regularly reviewed will certainly come in handy.

Experts say everyone should have a financial plan in place. If you're single, you should start the moment you land your first job. For married couples, both the man and the woman should jointly come up with a financial plan and to invest together. Studies in the west show that as a partnership, men and women together often make better investment decisions.

To be sure, there is some work involved in coming up with a financial plan but many expert say it is not as difficult as appears to be. Creating a financial plan does not involve rocket science. Unless you want it to be. Often, keeping it simple will make it easier for you to stay focused and stick to the plan.

Start with a long-term goal. If you're married, work with your partner in coming up with the plan. Determine how and when you want to retire. Do you want a lavish and indulgent lifestyle, or to live simply? When it comes to money, is your goal to make as much of it as possible, or to be financially independent, free of debt? Are you planning to own a home, and if you already have one, how soon do you want to pay off the loan?

Next, consider your current obligations to help guide you in understanding what your medium term goals would be. If you have children or are planning to have them, you would have to think about saving for their education. You also need to consider about taking care of your parents as they grow older. If you're still single, you may also be thinking of saving for marriage or buying a car.

Don't worry if your goals may seem impossible to achieve, especially when your current lifestyle leaves nothing much for savings at the end of the month. The secret to being rich is to always spend less than you earn. Sure, getting a higher paying job may help you to get rich faster, but you still won't get there if you spend your entire paycheck, and more, every month.

If you're surviving with little or hardly any savings now, what you may need to do is to change your spending habits. By planning your spending better, your goals will be easier to achieve than you think. To develop a spending plan, you will first need to track where your money goes. You can do this by making a list of your actual monthly expenditures. Experts say two months should do it. This will help you to find out where and how you spend your money, how much you owe monthly, and whether you have any left over at the end of the month.

Then, look through your list of expenses and determine which are the necessities, and if there are items that you can cut back on, or even do without. For regular expenses, you may want to consider economising, such as switching to less costly brands, or having less of the item. But that doesn't mean you should do away completely with the little luxuries that give you pleasure. A girl's gotta have fun too. But if you can't afford to have it every month, adjust your spending plan to include money put aside to enjoy these luxuries every other month or so instead. What you do not want is to keep being in over your head with expenses and face mounting bills.

There are many budget calculators available for free online, or you can download one from which should more than meet most people's needs.

Some warning signs that your spending habits are getting out of control include:

* using your savings to pay current bills

* delaying payment of some bills which you used to pay on time

* taking out new loans to pay for old ones

* defering your loan repayments

* prefering to pay by instalments when buying everyday household items

* owing more than you earn at the end of the month

* buying on impulse even though you know you can't afford it

By creating a snapshot of the incoming and outgoing cash flow, you can target areas where spending is out of control and also set a clear path for saving. If your income is more than your expenses, you will be able to set aside money to put into a savings plan to use towards achieving your financial goals.

Below is a guide on how to make a written spending plan from

i. Establish your monthly total income

ii. Add up your total expenses including fixed monthly bills, loan repayments, rentals, daily living expenses, etc.

iii. Put aside a fixed sum of money, enough to meet emergencies or seasonal expenses, such as school fees, road tax and insurance renewals.

Keeping track of your finances can be hard, particularly if you're constantly worried about money. Looking at your finances regularly will make them less intimidating and help you address financial problems more quickly. Focus on things that you can control. It's also important to find room in your budget for savings.

Finally, you may also want to consider insurance for protection against financial hardship from unexpected events. Setting priorities can help you make financial decisions that are right for you and your family.
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