Equal rights entail equal responsibilities. However, this also must translate to financial independence for women. Independence can lead the way to happiness provided it is built on grounds of awareness. Ignorance is not always bliss. This is especially true of many people in India, especially women, who continue to steep deep into a financial abyss, thereby, remaining dependent on their men to take financial decisions.
As per a recent survey by Tata AIA Life Insurance to assess “Financial Awareness Among Women”, Indian women still refrain from taking independent financial decisions. Though 44 per cent have responded about how they would like to decide on their finances, if allowed to do so, the dependence on the “Man of the House” continues to be unrelenting.
Commenting on survey findings, Girish Kalra, Chief Marketing Officer, Tata AIA Life Insurance said,“Understanding our consumers is a critical component of our Consumer Obsession value. Women are an important stakeholder when it comes to financial planning, however very little is known about their preferences and attitude from a financial planning and life insurance perspective. This survey clearly reveals that we have a journey to travel as a society, to involve women more in the financial planning process.”
The key findings of the survey include:
Marriage does not alter dependence
Survey results highlight how 89 per cent of married women rely on their spouses to decide their investments. This dependence stems from the age-old behaviour of women having remained dependent on their fathers to make financial decisions on their behalf. The tendency to latch on to someone from father to husband continues as most of them do not have the liberty of deciding their finances. The fact that most women in India get married by the time they turn 22 years old is another factor that holds them back from deciding what they want to do with their money.
Manju Dhake, VP – Insurance Strategy, 1finance.co.in says, “Being financially independent (as a working woman) and making independent financial decisions, in my opinion, are two distinct things. Numerous studies have revealed that women depend on their husbands or fathers when making financial decisions; perhaps this gives women a sense of security and validation. Marriage has absolutely not been a hindrance for me because I am a working woman who prefers to make decisions jointly with my spouse despite being financially independent.”
What does financial independence mean?
Financial independence is a subjective term, especially, when thought of in the Indian context. For around 39 per cent of the women covered in the survey, financial planning is solely restricted to planning and deciding the monthly budget. This is unfortunate considering how a lack of knowledge of personal finance abstains multitasking women from exploring multiple investment options or building a secure financial future for themselves.
Kamna Chibber, Clinical Psychologist and Head - Mental Health, Fortis Healthcare says, “Women are not often made aware of and explained how financial management works from a young age. The narrative within families and societies often tends to be one where women are not thought to have the skills or the ability to understand finances and are prescribed certain roles as well that prevents them from feeling confident and comfortable with the same."
He added, "Not being involved in conversations relating to financial matters or decision-making relating to the same also further contributes towards it. When they find their choices being questioned it takes away from their confidence further. They often don't have the belief that they can read and understand and develop a greater ability to be able to engage in matters of financial relevance.”
Also, among the 42 per cent of women who understand the importance of planning their finances, only 12 per cent stay back at home to look after their families.
Knowing about personal finance is imperative among both men and women. Deepali Sen, founder partner, Srujan Financial Services LLP (a Mutual Fund Distributor) says, “Since Money matters compound (both ways, things become easier if you start early and get tougher if you begin later in the day) with time.
A lack of understanding of personal finance can leave:
- Compounding matters not appreciated well enough along with.
- The fact that risk is needed (for us to stay ahead of wealth eroding nature of inflation and taxes) to nurture money.
- That asset allocation is required to mitigate risk.
- Emergencies can happen anytime, without warning and they can derail our financial life for the worse.
- Budgeting of expenses makes space for surplus to be invested well.”
Despite the cries for equality on all grounds for both men and women, many women are not allowed to make their finance-related decisions. This is evident from numbers revealing how 59 per cent of the working women interviewed do not take their financial decisions independently. This number goes up to 65 per cent in Tier-3 markets where the strictly patriarchal mindset disallows even working women to take independent financial decisions.
Pratibha Girish, Founder, Finwise Personal Finance Solutions says, “Historically we have seen that most money decisions are delegated to the man in the family. Women involve their fathers, brothers, husbands and sons to take the lead. While many women have moved away from being homebound, they are financially independent but have not made the change in habits and continue to let others handle their finances. For a few who want to handle their own finances, family is dismissive and fighting the battle to have a say in money matters seems tough. Luckily things are changing and quite a few women are actively getting involved in and even taking the lead when it comes to finances.”
Prioritizing decision to decide about finances
Are women just looking for that one golden chance to decide for themselves? This question must be reiterated time and again to remind us how gender equality can be achieved only when this society allows complete financial freedom to its women. Developing cities are now aping their metropolitan brothers in this regard. Statistics underscore how the women in Tier-2 markets are increasingly embracing the idea of deciding their finances sans any family interference or help.
Adelia Castelino, co-founder and managing director, In-Solutions Global Ltd says, “In India, women are getting more aware of the power of financial independence. The decision-making and freedom it provides them to live a life on their own terms. A woman at work, a woman being financially independent is a great sign for the growth of the entire economy. For women, home, education and well-being have been always their first financial priorities, around which they build their lifestyle.”
There is a lack of social awareness as much as financial awareness among women. The lack of awareness about their rights has forced many women to accept the brutality of remaining forever dependent on the men in their families to decide where and how they must invest their money. While women are now way ahead when it comes to earning and saving their money, they fall behind in realizing which investment opportunity will help them achieve their financial goals faster.
Not all women invest in the same way. Some still follow the archaic way of parking their money in traditional instruments. Bank fixed deposits continue to be the favourite among at least 62 per cent of the women surveyed. This they believe will financially secure the future of their families and loved ones. However, when asked which investment opportunity they rely on most, many of them turn to their husbands for support in making financial decisions.
Priyanka Wadhwa, Co-Founder & Chief Strategy Officer, CommsCredible says, “I believe financial freedom is not a gender-specific phenomenon. It’s a necessity of the developing society today, which is aspiring to become a developed one, with a dignified standard of living.
For the concept of financial independence to truly imbibe in our Indian households, it’s important that the subject of what is money, why it's important, how to earn and manage it etc. becomes part of the school curriculum. India has over 15 million women-owned enterprises. It shows that women are now moving on from their homemaker role to the one of leading businesses.
Financial independence is slowly gaining momentum beyond a lifestyle aspiration to a skill upgradation one. Everyone wants to be a better version of themselves, the one who is not only financially independent but also skills-wise an expert in their area.”
Embracing life insurance
The Covid-19 pandemic brought forth the importance of buying a life insurance policy as a definite measure to ensure financial security. When it comes to using life insurance as a critical financial tool, women from Tier-3 cities are more likely to invest in at least one such plan. Among all the life insurance products that women from these cities prefer, savings plans are preferred more than term insurance. Pension plans and ULIPs ranked the lowest among all available insurance options. However, when explained, the women showed greater affinity for unit-linked insurance plans (ULIPs) and term insurance solutions.
Trust mattered to most women looking to park their funds in various investment opportunities. The lure of quick profits and guaranteed income ranked next. When it comes to buying life insurance, women prefer buying plans that charge lower premiums.
For years and decades, our society has deliberated on women's empowerment hoping to achieve the same through gender equality. What many do not realize is that rights stem from responsibilities and it is only when women are allowed to feel equally responsible for their finances, they would experience “equality” in real terms.
Allowing them to work in the same environment or encouraging them to break the glass ceiling is not enough. Money begets confidence, and that is why women must be allowed to decide their money matters by themselves.
When it comes to financial planning, it is high time that we tell the women in our families to call the shots.