Don’t Make Excuses; Learn To Plan Your Money

By Lisa Pallavi Barbora
Mint, New Delhi

WWR Article Summary (tl;dr) When it comes to women and money, for many, there is still a sort of hesitation to plan and invest.  Why is money such a taboo subject for women?  Whether you work inside or outside the home, all women should build the ability to decipher basic financial matters so that they can support themselves and their family. The thought needs to move from “Yes, I want to or would like to”, to “I have to”.

Mint, New Delhi

Financial planning ought not to be gender specific. Yet, we hear and read a lot about women taking a back seat when it comes to this topic. Planners say it’s because of a combination of lack of interest, financial inertia and traditional role sharing (for married couples).

One of the basic issues is a bit of under-confidence among women when it comes to talking about financial matters.

In a study conducted by marketing research firm Kelton on behalf of Fidelity Investments in 2014, it was found that out of about 1,500 women who were surveyed, eight in 10 would refrain from discussing finances even with those they are close to.

The survey also found that less than half the women said that they were confident about discussing money and investing with a financial professional on their own.

This survey was conducted online and based on responses from women working (or retired) in the US. Indian planners whom Mint spoke to have supported these findings. Typically, the awareness about financial planning and its need comes about when you have a family (both for men and women) or when your income is high enough so that savings are more than what you can spend.

It’s never too early to know how to grow your money. But why the alleged apathy from women towards investing?

There could be a number of reasons, and if you (assuming you are a woman who invests or at least wants to) identify with any of the reasons given below, read on to know why it’s time to stop making excuses and start investing. And in the next few pages, find out why you need a plan, the best financial products to buy and even the smartest ways to spend. To help you along the journey are words of wisdom from those who have been there and done that.

I don’t understand numbers and financial jargon
Going through percentages, returns, sum assured and so on isn’t something many want to do. However, the outcome of it–a financial plan–is invaluable. Once you start a family, there are responsibilities that come to the fore–children, house, retirement, and so on. Your husband might understand all of this better, but if you are aware of the family’s finances, then together you can impact the outcome positively.

“Women are at the centre of the family and without them the entire family is at a loss. Sometimes, women aren’t encouraged to look into financial matters and investments and many times they themselves don’t want to take on the additional responsibility,” said Alpa Shah, director, Next Level Education Pvt. Ltd, and founder, Freedom Foundation, a non-government organisation. Being involved in money matters shouldn’t be seen as an additional responsibility–it is a basic necessity. If you don’t understand numbers, start slowly, and read up on basic terminology. Product specific information can be accessed online through company websites in the FAQ sections, and reviews and comparisons, too, can be accessed easily.

My salary is pocket money; husband takes care of investments from his
While this might be the case, it isn’t reason enough to shy away from getting included in investment discussions. Kavitha Menon, a Mumbai-based financial planner, said that working women are able to lend themselves to personal financial management as they might be conscious about the money they earn. At the same time, she said, “I also meet women who, if they earn much lesser than their partners, feel that their earnings are more like pocket money and it is the husband’s income which should be utilised towards things like savings and investments.”

Many planners we spoke to said that they insist on meeting both spouses in the initial stages of financial planning. “Detailing of a plan is much more relevant if both partners are present. In general, women tend to live longer than men, so being aware of financial products is important,” said Abhishake Mathur, head-investment advisory, ICICI Securities Ltd.

However, some planners find that it’s easier said than done to get women involved. “There is a certain wariness about finances, and women often don’t want to apply themselves in understanding what a financial plan is,” said Nisreen Mamaji, a certified financial planner, and founder, Moneyworks Financial Advisors.

It feels good to have the independence to spend your money the way you want. But why should your family’s financial future be only your husband’s responsibility? You can do both.

Financial advisors don’t understand my personal issues
Financial planners have spoken about instances where the husband, who is primarily responsible for investment decisions, has insisted that the wife not be involved, as ‘she wouldn’t understand’. The reverse can also hold true–you might feel that your adviser doesn’t relate to your personal needs and goals.

Make sure you talk to your spouse or father or any other person within your family who is involved in the financial decision making. Ensure that your concerns are heard and taken into account. For example, it could be that you are risk averse and more likely to allocate higher amounts to investing for retirement than, say, for travel. Talk about this with your adviser and your husband, so your concerns are taken into account while chalking out the final plan.

Financial advisers will let you include family members in the overall goal setting, and women might be in a better position to do the detailing. If you spend relatively more time with the children, you might be in a better position to know their future aspirations and how much would be needed to plan for that. Similarly, as the person who manages the household expenses, you might have valid inputs on what daily expenses after retirement could look like. The only barrier here is communication. “The root cause is a basic lack of communication with the spouse. Maybe we can put it down to our traditions. However, it’s important to make women feel confident rather than just thrusting financial responsibilities on them,” said Shah. So, make sure you get yourself involved.

I can’t make these decisions on my own–I need my father/husband
You can make financial decisions on your own. It’s not difficult if you follow through the earlier steps. Read up a little, save money and get an adviser. “In our experience, most women go with the decision their husband has taken, even though there might be some healthy arguments. It could be a cultural aspect as well. But it’s surprising that even though both work and earn, running the family finances falls with the husband,” said D. Muthukrishnan, a Chennai-based distributor.
And this is not the case with just married women; single women often have their brothers or fathers going through their investments, said Muthukrishnan.

Dilshad Billimoria, director, Dilzer Consultants Pvt. Ltd, said, “Women from business families are less likely to be included in financial matters.” However, attitudes are changing and one can take a cue from those moving forward in a different direction. “Working women are keen to explore newer and riskier asset classes,” said Menon.

However, there is no need to have a well defined distinction between working women and homemakers. All women should build the ability to decipher basic financial matters so that they can support themselves and their family. The thought needs to move from “Yes, I want to or would like to”, to “I have to”.

I don’t have time after office, work at home and children, to focus on investments
It’s true the process of financial planning is a bit time consuming at least to start with. You have to sit down take stock of your existing investments, list out your goals and money objectives, decide which products you would like to invest in and then do the needful to actually make the investment. But once the process has been kick started, you won’t need to dedicate too many hours in a week or a month. In fact execution is often somewhat on auto pilot after the decision around goals, asset allocation and products has been taken.

This is possible by involving a financial advisor to guide you through the process and assist in the execution.

Shah says, “Gathering the knowledge is important, then execution can be on auto pilot. For example, even though many of us know how to cook and driver, we do keep help for this. It saves time and effort. Your advisor can guide you and help you in execution, taking the time and effort off your hands.”

With a little effort you can get a lot done. In fact saving and investing for your future should be a priority as monetary security can help you better manage home and work.

We have a house, gold and life insurance. Isn’t that enough?
It’s good to fill the investment basket with real estate and gold, but it’s not enough. There are many considerations here. For instance, what if you want to have easily accessible investments which earn more than what your money would in a bank savings account? Selling a house is often not a quick and simple transaction, if you are in need of a large sum of money immediately.

Yes, life insurance is a good idea. But it is a basic need and not really an investment. And among the plethora of policies, which should you pick? What about medical insurance and home insurance?

“If both partners are working, taking a cover for both and not just the person who earns a higher income should be considered,” said Mathur.

These solutions need to be thought through. When it comes to real estate , there is also the matter of joint ownership and relevant taxation. Diversifying investments into long-term goals and near-term needs is required for an efficient outcome. “Often, we find that homemakers keep aside savings either in a bank or in cash or gold. If they get involved with financial planning, better investment decisions can be made around this basket,” said Mathur.

Outsourcing your financial planning to an adviser is something that you should actively consider.
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Attitudes are changing with time as more women get involved in goal setting and investment decisions. With access to qualified advisers, women should undertake this step independently. Start early. Spend a little, save more. Add a dash of investment as you go forward, and you will be in a more financially secure place.

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