How can moms plan their finances better?

Most mothers are great at cutting corners to save that extra for the family.

May 12, 2019 09:05 IST India Infoline News Service

Mothers Day
Is it Mother’s Day, would be the first question crossing your mind. Of course, you are right. Mother’s Day falls on May 12, and it is a time to celebrate motherhood as a role. On Mother’s Day, celebtrate your mother, your wife, your sister and your daughter. They all take on the mantle of motherhood at some point. Mother’s day in India is still a lot about traditional emotions; bereft of the realities of the modern world. The reality is that moms also need to plan their finances. As a homemaker, an artist, an entpreneur or a an executive; financial planning always takes a back seat. This Mother’s Day let it be different. Here is how moms can plan finances better.
 
Does mom have an emergency fund?
 
Moms need an emergency fund for various reasons. They are called upon to chip in when there is a crisis in the family. The emergency fund will be a lot safer in your mom’s hands. There are a lot of expenses including medical and middle age expenses that a women has to go through. An emergency fund can solve most of her needs. In fact, most mothers are great at cutting corners to save that extra for the family. Just create an emergency reserve to the tune of 6 months of family expenses.
 
Should moms also have insurance?
 
That is absolutely essential. Life insurance is a must for any person who is earning money and whose absence can cause financial loss for the family. However, even if your mom is a home maker, she should have an endowment insurance policy that can give a combination of risk cover and a safe futuristic investment. An insurance cover not only gives peace of mind but is also a boost for her self esteem.
 
Mom’s must create financial wealth too
 
In India there is a proverb that “No son becomes rich enough to repay his mom’s debt”. That is absolutely true. But, moms should also take up financial investments in their own hand. Look at something as simple as SIP in an equity fund. Most moms manage to squeeze savings and put away for a rainy day. The beauty of a SIP is that these small savings can really grow over longer periods of time. Consider the table below:
Monthly Saving Invest it in Annually earn For a period of Mom puts in Money grows
Rs2000 Equity Funds 14.50% 25 years Rs6 lakhs Rs59.83 lakhs
Rs3000 Equity Funds 14.50% 25 years Rs9 lakhs Rs89.75 lakhs
Savings by your mom can create big wealth over time. She can actually get a pleasant surprise with the amount of wealth that a little bid of prudence has created; thanks to the power of equities and compounding.
 
Moms can be savvier equity investors
 
Moms are actually best suited to get ideas to invest in equities. In fact, Peter Lynch of Fidelity Magellan used to get more investment ideas from the supermarket than all the investment conferences. Look at some of the multi-baggers like TTK Prestige or D-Mart in the Indian market. Moms would have been best placed to figure that something big was happening in these companies. If you wonder if small investments can create big money, think again. An investment of Rs1,000 in Wipro in 1980 would be worth Rs65cr today and that is without dividends.
 
Use money to get a life after 50
 
You do not have to be a Mae West or a Marilyn Monroe but there is a life that mom owes to herself. And that requires money. Ensure that money is not just used for the family needs but also to give moms a life. Let them use money to chase their dreams. Invest in a skill that mom always wanted to acquire. Let mom go on a holiday with her friends. Set some money aside for all that.
 
Along the way some things may go wrong and some of the ideas may not work. But as Sophia Loren said, “Mistakes are the price of an interesting life”.
 
Happy Mother’s Day! 

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