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Head Start

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Making a Fresh Start

In today’s social scenario, as the occurrence of divorce has risen many divorced women suddenly find themselves in a situation where they have to manage their finances on their own. Here is a brief guide on the must-dos for women after a divorce.

INSURE FIRST

Just in case you have children, you will need to first secure yourself against the biggest risks-to your life and health. For this you will need to have adequate life and health insurance cover. Go for term plans that provide adequate life covers at a low cost. To get the lowestcost term plans, shop online. Having done this, buy floater health plans that cover all your dependents. Later, you can get individual health plans. As your finances start getting on their feet, broaden your insurance cover with critical illness and accident insurance plans. This will ensure that your dependents especially your children are not impacted by any mishap to you.

CREATE REGULAR INCOME

This could be a tough nut to crack, especially for those who are m a n a g i n g finances for the time. You could make a beginning by looking at a monthly income from your lump sum that you might have got from your share of savings or from alimony. You can begin by investing in of post office monthly income scheme. You could also consider the monthly payout options of bank fixed deposits (FDs).Later, you can invest a portion of your money in monthly income plans (MIP) offered by mutual funds that have an established dividend track record. Thanks to their equity exposure MIPs help you counter inflation that tends to dent the purchasing power of regular income. These sources of regular income can be supplemented by your regular salary if you take up work, as many women in these circumstances do.

SECURE YOUR KIDS’ FUTURE

Single women with young children need to ensure that they do not fall short of funds when the children need it for their higher education. To do this you must ensure that their investments grow at a rapid clip. As we are all aware, investments in equity have been found to be the best bet for high growth. If you have 8-10 year or more left for this goal, you could make a simple beginning by investing in index funds every month through systematic investment plans (SIPs). Since this is a long-term investment that gives rich rewards over a long period of time, don’t get flustered with short-term fluctuations in value of investments or market movements. As you get comfortable and acquainted with investing in index funds and equity exposure in general, you could consider SIPs in large-cap equity funds with an established track record. Unlike fixed deposits, where you don’t need to track the progress of your investments, you need to keep an eye on how mutual funds are faring over time. Consider replacing laggards if they trail peers over 18-24 months. You need to supplement your equity fund investments with investments in a Public Provident Fund (PPF) account that you can open in the name of your child. This ensures that you have a certain minimum growth from the first year onwards.

PLAN FOR RETIREMENT

As with children’s future, you need to save for the other important goal of retirement. You can follow an identical approach we recommended for investments for children’s future, i.e., have your own PPF account (in addition to your children’s account) and then start investing in index funds and graduating on to large-cap equity funds with an established track record.

PLAN FOR ACQUIRING A HOME

Along with the other long-term goals you need to have home buying on your radar and as much before retirement as possible so that your retirement and other money gets enough time to grow after your acquisition. These were some of the essential things that a woman needs to start doing after a divorce. If all this appears too tough, you could take the help of established financial planners and other distributors after checking their antecedents. By yourself or with the help of professionals you can surely rebuild your finances and empower yourself to rebuild your life.

Next To Come: Making Do with Less