A concise guide for women to achieve financial freedom by being the CFO of your home.
Today, we have Money Masters and CFOs to make sure that money is not mastering you. If you think that being a CFO is tough, forget it, women can be CFOs of their own home. Considering the pandemic, it’s time to wear that CFO hat for planning your household finances well.
Becoming a CFO at home implies efficient money management to live a happy life.
Budgeting :
To manage your money well, you need to know your finances. Budgeting helps you in achieving this.
The best way of keeping expenses in check is to use a budgeting tool which captures all the figures. A list with costs of your hangouts with friends and grocery list may sound distasteful, especially because you are too busy to make one or you don’t want your spouse to see it. But a simple plan can be your financial barometer.
Manage Spending :
Planned spending can help in efficient money management. Here are some tips :
- The DIY way : Be it stopping unwanted eating out, outsourcing to an expensive laundry or even keeping a highly paid maid, you can DIY.
- Distinguish the VED : Homemakers have the best idea on how to manage the purchases smartly. The VED stands for the ‘Vital, Essential and the Desirable’ spending. Vital goods are those that are indispensable; for example, food and grocery. Essentials include telephone and internet, the absence of which tends to reduced efficiency. The desirables are those that are termed as a luxury.
- The ABC method : ‘Always Better Control’ is the best practice when you list out the desirables. You need to decide and understand the importance of different needs and spending before allocating money.
Managing your Debts
A loan is a best friend indeed, but can also turn to a beast, pulling you towards it further. So ensure that your family keeps the loans on the leash, as per the checklist below :
- Total loan payout should not be more than 50% of monthly income.
- Payoff all dues on time.
- Pre-close the costly ones as early as possible.
Stay Covered
Imagine that you are leading a healthy financial life but there was one chink in your armour. If the worst were to happen to you or your spouse any time, your family would have to make a fire-sale of the investments or even the home that you painstakingly made.
So here’s what you look for in insurance covers :
- Start early
- Ensure that you have covered adequately (both life and health)
- Choose plans with a maximum tenure
- Split your covers for better risk management
The logic applied by the home CFO is the same as that of the CFO in business by implementing ‘Multi-criteria Decision Making’. By being a CFO in the house, you are the backbone of the house, even if you are not the main breadwinner.
nisary@hubwords.com
Author’s Bio
Nisary is an ex-banker turned entrepreneur and founder of HerMoneyTalks India’s first one-stop financial platform for women.
