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How should a single mother manage her personal finances?

​​SIPs in equity mutual funds will ensure that money is saved, even before you begin to spend it. You can start small and enhance the amount later on as and when your salary goes up. By doing this, the amount can grow into a decent sum over time.

Updated: Oct 28, 2019, 11.17 AM IST
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Liquidate assets you don’t need and deploy funds in income yielding investments.
Hina is a single mother. She has very little money left after meeting her household expenses every month. Worried about not being able to save enough, she is diligently curtailing her expenses as much as she can. This is also stressing her a lot. She feels guilty about not being able to indulge her only daughter. She is also worried about the health of her elderly father who lives with her. Hina wants a more stable and steady financial life. Besides being able to fend for her family, she wants to create a fund for her daughter’s higher education. How should she manage her finances? Does she need a loan?

Hina should put down a strategic map of her personal finances, where she should begin with a list of her assets and income. The source of income for a household are its assets, and each asset should work for Hina, supporting her salary. Sometimes too much is hoarded in assets that do not generate any income. For example, Hina may have gold and jewellery that she does not use, or property, land or house that is yielding no income. She may be driven by a sense of security provided by these assets, but these are useless in her day-to-day life. Hina can liquidate assets that she does not need, and deploy the funds in income yielding assets such as deposits, fixed income investments and equity funds.

After augmenting her income, she should buy life insurance that protects her daughter, and a health cover for the three of them. This will provide the security she needs for the family, without having to invest in an asset. Leaving behind a house or jewellery that may be too tough to sell might be a worse idea than ensuring insurance proceeds that will be readily available to use, if something were to happen to Hina.

SIPs in equity funds would ensure that money is saved, even before she begins to spend it. She can start with small and enhance the amount as and when her salary goes up. This amount can grow into a decent sum over time. The SIPs should take care of her daughter’s education as well as Hina’s retirement.

Hina should desist from taking loans, especially if she uses them to fund more investments in property. The EMI will reduce her ability to save and the asset would be too large and inflexible to be of any use to her, apart form earning a very small rental yield. Taking charge of her assets and income might help Hina manage her finances better.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of

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