Here is a simple six-step plan for financial planning for women.

But before we get on to that, a gentle reminder: For women, as with all individuals, investments form an integral part of financial planning; investments generate returns for the future and take care of your financial needs. This is especially necessary in light of the big question -- 'What if'?

'What if' your husband has not planned your finances well enough? 'What if' there was an eventuality in your family? 'What if' your children's career plans cost you a hefty packet? After all, it's the children who decide on their future, not the parents.

And most importantly, the need for financial independence for today's woman, investments have a role to play therein as well.

Education has also played its part in driving women towards the corporate world. More women are taking to education than before. Armed with a degree, they naturally want to put it to good use by taking up a job. The past few years have seen a steady rise in the number of working women in India.

On the other hand, the Indian marketplace has also evolved and thrown up a whole gamut of new goods and services at the consumer's disposal. This has led to a change in lifestyles for many people. With women taking to work, disposable incomes of households have also increased. And naturally, along with income has come the additional responsibility of investing.

Apart from working women, homemakers too should take to investing. They can save from the monthly allowance they get to run the house. Not only will this enable them to plan better for the family's future but the savings will also prove to be handy on a rainy day. After all, women are considered to be better savers than men!

Like all of us, women also have to deal with an increase in cost of living (inflation). Vegetable prices have been rising consistently. A gas cylinder, which was available for around Rs 70 ten years back, costs almost Rs 300 now.

And of course, there's the issue of rising medical bills as the years roll by. Women hence, need to ensure that they have an investment plan in place to secure themselves against inflation.

These are just some factors that should compel women to think on the need to invest. And of course, drive them towards actually investing money on a regular basis into various investment avenues.

But just what are these investment avenues that we are talking about here? And how do women go about the task of investing their money 'smartly' to yield a desired return on their investments?

This issue of Money Simplified answers all these questions and in the process, empowers today's woman with the necessary advise and guidance to secure her financial future.

6 steps to financial planning

The most arduous of journeys begin with a small step. When it comes to something as important as planning for child's education and marriage, that small step means setting yourself an important objective.

To put it plainly, the fundamentals of investing are no different for women; so you have to plan your investments, execute the investment plan and track it regularly. If this sounds a little complicated, don't worry, we have simplified the process for you.

Step 1: Define your objectives

The most important thing to do while you sit down to plan your finances is ask yourself why you want to invest. For a married woman with kids, the answer could be child's education or child's marriage.

For a woman whose kids are already married, the desire to invest could stem from a dream to set up a small boutique, for instance. For a woman who is yet to get married, it could be for her marriage. So you could have a variety of objectives; when you get down to penning them down you will notice that the list is a lot longer than what you had bargained for.

When we began compiling a list of likely objectives for women we came up with some interesting options:

• Saving for your own marriage 5 years from today.
• Saving for your child's education 15 years from today.
• Saving for your child's marriage 20 years from today.
• Saving for a small business that you want to set up at a later date.
• Saving for an overseas trip, maybe even a pilgrimage 5 years from today.
• Saving for a gift for your spouse or parents.
• Saving for your retirement 30 years from today.

This seemingly long list could be even longer when you take into consideration objectives that are peculiar to you. Some of the more popular investment objectives like saving for child's education and marriage we have discussed in detail in 'Plan for your children's future.'

Once you have the investment objectives in place, the next step is to prepare an investment plan to achieve those objectives.

This may sound daunting, but it isn't, when you consider that it's your investment consultant who has to draw up the investment plan and your role is limited to giving him inputs in terms of your investment objective, appetite for equity-linked investments, investment time frame, tax-efficient returns and the like.

Step 2: Identify the investment consultant

Since your investment consultant has such an important role to play in helping you achieve your investment objectives, it is important that you 'connect' with the right consultant.

If you have been reading the newspapers even cursorily, you would have observed several instances of agents getting their clients to invest in unsuitable investments only to boost their commissions without a thought to the client's investment objective and risk appetite.

In the long run, this could have a ruinous impact on your investment plan. To make your job simpler, we have prepared a checklist to help you select the right investment consultant:

• Both insurance and mutual fund consultants need certification before they begin advising clients. Insurance agents must be certified by the IRDA (Insurance Regulatory and Development Authority), while mutual fund agents must be certified by AMFI (Association Mutual Funds in India). The agent must have the certification on his person, so it's relatively simple to affirm whether your consultant is qualified.
• Does your investment consultant offer a complete investment solution? Or is he the type who only collects the application form, cheque and submits it to mutual fund/life insurance company? Remember you are looking for an investment consultant not a delivery boy. An investment consultant should be competent enough to understand your financial objectives and chalk out an investment plan that can best help you achieve them.
• It is critical that investment consultants are objective and unbiased in their advice. Being objective means placing the client's interest over your own. How do you discern that your agent isn't taking you for a ride? There are ways to find out. For instance, if you are a low-risk investor and your agent recommends a sector-specific mutual fund or an aggressive ULIP (Unit Linked Insurance Plan) then you can be sure that your investment objective is being sacrificed to fill his pockets. The investment consultant should be faithful to the plan that he has prepared for you and his advice must revolve around it.
• Value-add investment services is another area that your consultant must treat as priority. Tools and calculators, stock and mutual fund alerts, portfolio tracker, research on mutual fund schemes and life insurance plans are some of the value-added services that investment consultants provide. Of course, there are few consultants who do this, but those are the ones you must identify. Some of these tools are web-based and should appeal to women who are net-savvy.
• Even after you have taken the insurance policy or invested in a mutual fund scheme, you relationship with the investment consultant continues. You may need feedback on your investment, account statement, premium cheques to be submitted to the life insurance company, follow-up on dividends on your mutual fund investments and the like. It is the responsibility of the mutual fund agent to provide prompt after-sales service and resolve these issues efficiently.

Step 3: Preparing an investment plan

Once you have identified the investment consultant, you must get down to actually implementing the investment plan keeping in mind the investment objectives. For this you need to bare your 'financial' soul and tell him exactly what you want to achieve, the time frame over which you want to achieve the investment objective, the amount of money you want to invest in equities (this is important because equities can give a push to your savings, but also carry higher risk).

If you find this a little too detailed and even unnecessary remember it's important for the consultant to know this so that he can prepare a well-defined investment plan. It's a bit like telling your doctor everything so that he can prescribe the right medicine.

Step 4: Executing the investing plan

After preparing the investment plan, your investment consultant will help you execute it. This involves, for instance, taking the child insurance plan for your child's education/marriage, or the diversified equity fund to build a corpus to buy property after 10 years.

All the investments and insurance options that have been outlined in your investment plan have to be bought. Of course your consultant will help you with it, but it pays to be personally involved up to a level.

For instance, to the extent possible fill the application forms yourself so you learn about the relevant details. While filling the insurance application form, you have to give a true and fair picture of your medical history, accurate information on your weight and height and other details of this nature.

Giving inaccurate information on these points could lead to rejection of claim at a later date. Your investment consultant is unlikely to know these details better than you, so personal involvement is necessary. Likewise, appointing a nominee is common across mutual funds and life insurance, so ensure you have those details correctly filled in.

Step 5: Review the investment plan

Setting the investment plan in action is an important step towards achieving your financial goals. But to ensure you stay the course, a regular review of the investment plan is necessary.

Of course, this will also be done under the guidance of your investment consultant. There could be several reasons why your investment plan may need to be adjusted from time to time.

One instance is when stock markets change course over a period of time, they disturb your asset allocation. So you may have to redeem some of your equity investments or buy more of them depending on how much risk you are willing to take.

As you approach the milestone (child's medical admission or marriage), you need to get out of equity investments since equities are risky in the short term. That money should be invested into short-term debt, which is relatively safe.

Again, all this may sound very complicated, but your investment consultant is the one who will keep his eye on such events and will make necessary adjustments to your investment plan. On your part it helps to be informed since it's your money on the line.

Step 6: Redeem your investments

As the event you have been saving for, is upon you, you need to redeem your investments. With a mutual fund investment this involves signing on the redemption slip and having your consultant submit the same to the mutual fund. In case of a life insurance policy that you have taken, it involves having your consultant submit the policy documents to the life insurer and follow up for the maturity proceeds.

Then you will need to sit down with your consultant and understand the taxation issues involved with the redemption of your investments.

As you can see, setting financial goals, outlining an investment plan, executing it, reviewing it, is not really a difficult task. It may be time consuming but it's certainly not difficult. With a systematic and disciplined approach to investing and by identifying the right investment consultant, financial nirvana could be closer than you think.

To know how parents should go about securing their children's future and the role women can play in the same, download your free copy of the Money Simplified.