Number one: Time Value of Money, which is the idea that money today is worth more than money tomorrow.

Three things women need to know to master moneyImage for representation.
Money Rupee Rani Wednesday, April 04, 2018 - 19:38

It’s a new financial year! April is a good time to take a renewed look at your finances and figure out how to save and spend your money better.

Here are three things women need to know get a grip on their finances not just in the coming year, but for life.

One: Time Value of Money

If you’ve ever lived with talkative grandparents, you’ve already been exposed to Time Value of Money, which is nothing but the technical term for your grandparents whining about how they used to buy gold for Rs 10 back in the day.

Time Value of Money is the idea that money today is worth more than money tomorrow, and knowing this is vital for making sound financial decisions. Basically, if someone asks you if you want Rs 100 today or Rs 100 in a year’s time, you need to know that Rs 100 today is capable of earning interest (or being invested) and will be worth more at the end of one year.

The most important takeaway from Time Value of Money is that money which stays idle is money that will lose value in the long run. Knowledge of Time Value of Money is essential when signing up for long term investment plans, especially those sold by silver-tongued agents who will have you believe that you will be spending your retirement in your own yacht in some pristine island.

Today, the amount that you are told you will receive on maturity might seem like it will be enough to cover whatever it is you’re saving for, but is it, really?

Two: Take account of inflation when you save

Inflation refers to a general increase in prices over a course of time. Inflation and Time Value of Money, in many ways, are two sides of the same coin.

For example, a medical procedure might cost Rs 1 lakh today. If you are looking to save for this procedure in two years’ time, it won’t be enough if you save Rs 1 lakh. This is because the cost of services increase over time, and the same applies to medical procedures, real estate, education costs, travel costs and even vegetables.

One way of ensuring that you save enough is to take the present cost and increase it by 10%, or if you want to be absolutely safe, 20% for each year. So if something that you want in two years costs Rs 1 lakh today, you should be looking to save Rs 1.44 lakh, since the cost will increase by 20% for two years continuously.

Taking account of inflation, even if it is a rough estimate, will help you save additional money which will ensure that your dreams won’t be out of reach.

Three: Know that the world is rigged against your favour

We might be living in the 21st Century, but we still live in a world that is rigged against women, especially financially. Women are paid less in comparison to men, and almost always have to take breaks in their careers for caretaking purposes.

This results in lower incomes and therefore lower savings. But wait, it doesn’t stop there! Women are also the ones who spend additionally on items of grooming and clothing, especially those in corporate positions because they’re expected to present themselves in a certain manner.

Women live longer and are therefore susceptible to a greater number of health complications.

Finally, let’s not forget that modern advertising is engineered to make women spend more on things that are almost always unnecessary. This is the system that is in place today and it is a system that puts women at great financial risk. Let this be the year you beat it!

Rupee Rani is a weekly column on finance for women. Write to us with your queries at

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