Financial Planning for Single Women: Strategies for Long-Term Security

Categorisation of Financial Goals

While planning for your financial goals, the first step is to categorise them based on the time period to achieve them. It can be done in the following manner.

Short-Term Goals

The timeline to achieve these goals is usually up to three years. Some examples include building and maintaining an emergency fund, clearing outstanding credit card debt and/or repayment of personal loans, buying a two-wheeler, creating a fund for annual domestic vacations, etc.

Medium-Term Goals

The timeline to achieve these goals is usually between three to seven years. Some examples include building a down payment fund for a house purchase, building a fund to start a business, buying a car, building a fund for an international vacation, etc.

Long-Term Goals

The timeline to achieve these goals is usually more than seven years. Some examples include building a retirement fund, early repayment of a home loan, building a fund for a child’s higher education and marriage (in the case of single mothers), etc.

Goal-Based Investing

Once you have categorised financial goals as discussed above, you can start investing towards them. If you have sufficient financial resources, you can invest towards all the goals at the same time. If the financial resources can’t cater to all goals at the same time, you can prioritise them and invest accordingly.

Using goal-based investing, you can make a goal plan for every financial goal. It helps you understand how much money you need, when it is required, how much you should invest, what is the expected rate of return, etc. Goal-based investing helps you stay focused on the goal and track its progress regularly till it is achieved.

Seek Professional Help

If you are new to investing or have started investing recently, it is recommended that you take professional help rather than taking a Do It Yourself (DIY) approach. You can hire the services of a qualified and experienced investment expert. Even if you are an experienced investor, an investment expert can add value.

An investment expert can make a goal plan for you, recommend the financial products for investment, review the progress regularly, and handhold you till the goal is achieved. During times of market volatility, an investment expert can help you control your emotions, ignore unwanted noise (news), and stay focused on your financial goals.

Control Your Emotions: Don’t Let Them Drive Your Decisions

In the investing world, the emotions of greed and fear are two of the investor’s worst enemies. During a bull market, there is exuberance, and some investors get carried away to invest more money in the hope of riding the up move. Similarly, during a bear market, there is extreme pessimism, and some investors give into the fall and redeem their investments in the fear the markets will continue falling.

During such phases, you should continue with your investments as it is. You should not get swayed by the greed emotion to invest more during a bull market, nor should you give into the fear to redeem investments during a bear market. You should control your emotions and not let them drive your investment decisions.

Compounding for Wealth Creation

For long-term financial security, you should invest regularly. In the long run, you give time for your investments to benefit from the power of compounding. Legendary investor Charlie Munger’s quote says: “The first rule of compounding is to never interrupt it unnecessarily”. With regular long-term investing and compounding, you can create wealth and achieve financial freedom.

Goal-Based Investing Can Help Single Women Achieve Financial Goals

FinEdge's investment platform 'Dreams into Action' has enabled women investors to craft an investing journey customised to their individual needs and goal focused. Along with investing towards your financial goals, invest in yourself to upgrade your skills and enhance your knowledge. It will help increase your income, thereby making more financial resources available for investments towards financial goals. More money for investments will help you reach your financial goals faster. With goal-based investing, single women can take control of their finances, achieve long-term financial security, and live life on their own terms.