Being financially independent is one thing and being financially secured is another. Financial security is about having adequate money. In a broader frame, it means being financially prepared when life throws those unexpected curveballs at you. It is about not feeling helpless and constrained to act, or to take tough decisions in life because of lack of money.

There have been umpteen situations when women find themselves in exactly such precarious situations. ‘I wish I had more money; I wish I could save more earlier,’ goes the common regret exuded in desperation. Therein lies the need to create a personal fund.

Financial security is as much imperative for women as men. In fact, more. Why? Because there are certain situations typical to a woman’s life trajectory.

Let us examine them:

Uncertain Career

As a woman’s personal and professional priorities change post marriage, her career path is gradually fraught with uncertainty. Some move abroad on dependent visas to support their spouse’s career. Some women take a maternity break from work but end up later becoming full time stay-at-home moms.

The never-ending career gap could be due to lack of support system, personal family situation, etc. The career path after sabbaticals gets a bit hazy for such moms. Although some resume their career after a long gap, they look for flexi-work options to balance work and kids and end up compromising with low paying jobs. Such situations lead to a lower career span for women and eventually lead to a depletion in their savings or restrict their future earning potential.

Unhappy marriage

A woman can feel helpless when she is stuck in a relationship with an incompatible spouse or non-supportive in-laws. She is compelled to compromise on her beliefs, her aspirations, and her way of living just because she does not have enough money of her own.

Parents in financial need

If need be, every daughter would like to extend financial support to her parents post marriage. She may feel constrained to help out her loved ones if she doesn’t have adequate money of her own.

There could be similar situations where a woman may feel constrained to act just because she had not saved enough money in the past. It is hence imperative for women to start saving early on, create a personal fund, and contribute generously to it.  

Just how much is enough?

It’s not enough to just create a personal fund. One should know how much to save and how often. Ideally, a woman must ensure to contribute a minimum of 20-30 per cent of her savings to this fund and increase the contribution every year.

This personal kitty is meant to be utilized for any uncertain/adverse situations as mentioned above. So, judging her financial needs and concerns, a woman should refrain from utilizing the fund for casual wants. As the fund is for a longer time horizon, a woman can balance her asset allocation by investing a portion in fixed income assets like bank deposits and a portion in growth assets like equity mutual funds.

To conclude, when you create a personal fund during the early working years, it can financially shield you and help you tackle uncertain or adverse life situations in the future. It will provide you the financial freedom to live life on your own terms and conditions, as rightly encapsulated in this popular quote by Clare Booth Luce:

A Woman’s best protection is a little money of her own.

– Clare Booth Luce