Issue No.55


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Basic money management for women

This article is reproduced with permission from
Normandy Advisory Services Sdn. Bhd (Licensed Investment Advisor)
15th Floor Menara Multi-Purpose, No 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur
Tel : 03 - 469 5560 Fax : 03 - 294 5561

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In Malaysia, despite the fact that women make up nearly 49% of the total population and have higher life expectancy of 74.1 years as compared to 69.30 based on 1996's statistics, comparatively few seek investment advice.

Women are generally perceived as hard-savers and they have an inbuilt consciousness towards security. However, this may not necessarily apply to all women as there are some who are great spenders as well.

Women be they single or married should leam as much about personal finances as possible. Do not take things for granted. Divorce, death or worse skill permanent disability are all contingencies with possible disastrous unknown consequences.

Comparatively fewer women have good understanding of investment markets and the benefits of proper Fmancial planning. A large proportion of married women tend to leave the subject of investment and financial planning to their spouses while thc single women generally would not give the issue much thought. Given the economic crisis we are now facing, it certainly is time for them to become aware and start their own financial plans.

This article is not about giving tips or predicting when will be the next big rally in the market. Instead, it discusses the general problems and possible solutions facing the following loosely defined groups of women.

Single Women

This is the perhaps the hardest group to advise. Life for this group is full of exciting distractions and saving is less of a priority that it should be. It is not a surprise to note that some do not even have their own bank accounts while others do not care about setting up emergency funds.

Those in the early 20s are commonly seen as the most aggressive spenders.They tend to live beyond their means, buying things they like and not what they can afford.

Women in this group should seek a disciplined savings approach such as regular deductions from salary, reducing credit-card spending, overseas holidays, etc. For example, you are likely to save a lot each year by paying off your entire credit bill each month and by getting rid of all but one or two cards. For that matter, why have two cards when one should be more than sufficient. ln addition, life insurance should be seriously considered to weather any unexpected storms.

Women in this group must plan to have sufficient cash reserves for their protection. Generally, a 3-6 month emergency fund is recommended by financial advisors. Your money can be kept at bank accounts with various interest rates offered. Most banks are currently offering attractive fixed deposit rates for various durations.

Working Mother

Often the main reason for mothers being at work is that the household needs more money. Sadly, often there is not enough to consider an investment strategy. There are many working mothers who do not have excess cash to put towards a family objective, like a holiday home, or higher education for their children. In particular, some parents have already been forced to defer plans to send their children to foreign colleges given the economic downturn.

It is in these circumstances a substantial amount of money needs to be saved over a number of years. Traditional fixed interest savings with their different rates, should not be automatically chosen.

When taxation and inflation are taken into account, you will probably shocked with the returns. Both are likely to eat up a major portion of your money. With the Ringgit's decline and prices of most goods expected to flare up after the double festive season, consider diversifying into other investments such as equity to enhance capital growth. You do not have to be a millionaire to invest like one.