Mother's Day: 6 steps for financial freedom for working, stay-at-home moms in 2024

Mothers are like a one-woman army, leading the platoon of her family all by herself. She is a good manager juggling family, work, and responsibilities. But never fails to stun us with her impeccable managerial skills. To honour the grit of mothers, here I bring 6 steps for her Financial Freedom.

With these 6 steps, working and non-working moms can invest their money, regardless of their salary.

1.    Calculate Your Net worth 

Mothers are no less than celebrities for their kids and they need to calculate their net worth. Which is very important for tracking your growth. To know your net worth, you need to calculate your assets and then subtract liabilities from it. 
For example: If you have 10 lakhs worth of assets and 5 lakh liabilities, then your net worth would be 5 lakhs. To be financially free you need to keep increasing your net worth every year. 

2.  Positive cashflow 

All mothers are great at saving money. This frugal practice can help you to increase your cashflow. Suppose, you are earning Rs 50,0000 or if you are a homemaker, you might be getting a budget to run your house. So, take that as your sum and deduct your monthly expenses. 

The amount that is left with you is your cashflow and make sure to have a positive cash flow. If your annual cashflow is Rs 50,000, then ensure in the coming year, it should be around 1 lakh.

3.  Create an emergency fund 

This is quite useful for single mothers who combat all the difficulties alone including financial problems. Although, its necessary for all single moms should do this as soon as possible. 

Creating an emergency fund for 6 months would keep your stress at bay, that usually stems from poor finance management. If you are planning to switch your job or any unforeseen situation arises this emergency fund will help you to get through it. 

4. Create a backup 

Don’t wait for any mishappening to occur and quickly buy an insurance policy. Protect your family by investing in good term insurance and life insurance. Although, both serve different purposes, but when coupled together, they offer lifetime protection. It also adds savings or income benefits for future goals. 

5. Use 50:30:20 Formula 

Although, it looks like a mathematical equation but I promise its not and every mother can easily decipher it. The crux of it that you should invest 30% of your money in safer schemes with less interest like Bank FD’s and 70% is high risk that offers maximum benefits like Mutual Funds, SIPs etc. 
Let’s assume your age is 30 which is a good time to start investing. You can invest 70% in equity and 30% in bank. As you will age don’t invest in risky areas, play safe because you need life time cover. So, invest 50% in equity and the rest in FD. 

6. Keep investing extra money in compounding growth

Invest your extra money in sectors where there is compounding growth. The miracle of compounding is such that interest is calculated on both the initial principal and all of the previously calculated interest. While in simple interest the interest is offered only on the principal amount. FD and Mutual Funds both offer compound interest so you can choose their schemes accordingly.  

All mothers should take these tips into consideration as it will open the gateway to a financially secure life.

The author is a finance influencer, corporate trainer and motivational speaker.