Money is one of the highest forms of energy. It is an effective tool which provides the strength and vitality to fulfil one’s needs or pursue dreams and aspirations. It has the power, the ability to change lives therefore empowering both its user and the owner. It provides the axis around which various activities revolve and eventually life evolves.
Similarly, women too are the fulcrum of any household. They are the focal point around which the entire family converges. They are individuals who are mindful of the needs of the juniors and senior dependants, can juggle and prioritise various goals, can manage the monthly expenses on a shoe-string budget, appreciate the benefits of long-term investing, understand the volatilities associated with the equity markets and have the ability to garner a lean or mean sum of money for an emergency purpose.
My practical experience of twenty-five years plus has provided me with a fair amount of exposure to draw these parallels. I have found most women to be better finance ministers of the family wealth than master chefs for their friends and family. They nurture money with the same fervour and long-term orientation as they care for their kids, the asymmetry or variability in the monthly expenses acclimatizes them to the vagaries of the stock markets. More often than not they have witnessed fixed monthly inflows on one hand and ever growing (changing) expenses on the other hand. And, amidst all this- life has to go on, family’s needs have to be addressed, financial commitments have to be met and yet; some money has to be pinched for, from the midst of all this organized chaos, to earmark for an emergency fund and for various goals of tomorrow.
I also realize that women are most conversant with the four key information points needed for planning the finances for the impending goals effectively, namely, cash flows (net inflows and outflows), assets, liabilities and goals. They can seamlessly weave in the priority of various goals by differentiating between the essentials and the feel-good. Owing to this, the success rate of the plan and its implementation increases if they are actively involved. They are the executors of the majority of household expenses and can do the job of balancing between various needs best. They can ensure that the monthly budget is adhered to and the surplus money is invested for the family’s future. With their active engagement their accountability also goes up. While planning the family’s financial future I insist on the participation of the women folk.
In all of this it is extremely important that the women folk look after themselves well while being a ‘giver’ of the family. They need to understand how and why certain monies are invested in particular investment options?
Whether their money is slogging the way they slog to earn it? Whether the nomination is in place? Does the life insurance amount appropriately cover for the junior and senior dependents needs? Does the medical insurance cover all the family members? Does the amount seem adequate? Will they have enough for retirement? Will they be able to take a sabbatical for a couple of years? After all, a giver should always be recharged regularly.
Groww, a widely used investment platform recently conducted a survey in March of 2021 to understand the investing habits of Indian women. The survey fetched 28,000 responses in three days. The study’s objective was to understand the qualitative aspects of women’s investing habits, their goals, and how they view the process of wealth creation in general. Even after 70 years of independence, women’s participation in the decision-making regarding investing is low, but among the women who are investing, a majority of them make their own decisions. What is still more encouraging is that women in the 18-25 age group have emerged as the most independent, where 60% women in this age group make the ultimate decision on investments on their own.
One of the most emphatic (and I see it come true each and every time) quotes on money is by Billy Graham. It goes as “If a person gets his attitude towards money straight, it will help straighten out almost every other area in his life.” Few headlines to build one’s financial goals around are, i) While taking life insurance, buy a term plan, avoid ULIPs (Unit Linked Insurance Plan) and the cover should be 15-20 times of your annual income, ii) Build an emergency fund equivalent to 8-9 months of expenses, iii) Buy a medical insurance which covers all the family members, review check out the claim ratio of the insurer, the amount of cover will depend on the health issues, ages of the insured and city the insured reside in, iv) Invest around 20-50 % of your monthly take-home (inclusive of EMIs, if you have loans) for your future goals. Always remember that tomorrow will happen faster than you think, v) Prioritize between various goals, retirement should be given importance over planning for a kid’s higher education. That is because a youngster can take a loan and a parent can’t be left with no or low money in one’s golden years, vi) Have nomination for all your assets. Better still, write a will, vii) Retire loans at the earliest. Only when you are loan free can you begin to do away with the anxiety associated with money. Also, interest is a sunk cost, it is a necessary evil, to be done away with at the earliest.
While the above are broad pointers it is best to seek professional help while planning your goals because the most important aspect of planning is customization- “horses for courses”.
A Chinese proverb captures it aptly, “When sleeping women wake, mountains move”.
Deepali Sen is founder partner of Srujan Financial Services LLP (a Mutual Fund Distributor) and author of ‘Why Greed is Great!’