The Importance of Money Management for Women

It’s only men who seem to get the attention when it comes to managing money in the household. In most families in India, men manage all the finances as they are the sole bread winners. But the economy of India has catapulted the fairer sex in the limelight. More and more women have taken to working and are bringing home the mullah. In such a scenario, it becomes more important for women to learn about how to manage their money. This article tells about the importance of money management for women.

Here’s my take on money management and women.

Our parents managed their money because of our dads. If our dads said a fixed deposit was the best investment, the women folks simply obliged. Staying at home and cooking favorite dinners for their husbands helped them raise their kids and their husbands paunch. Little did they know about insurance, retirement and getting rich.

Things have changed. The woman of modern day India needs to change as well. My observation is that while many women do not know about basic personal finance, same is the case with men.

We meet a lot of clients here at TheWealthWisher where the entire financial planning process is driven by the male counterpart. The woman is merely a spectator who nods and acknowledges intermittently. We have to force them to get interested.

We urge them by asking basic questions on budgeting, something which most of them know. The women folk get interested when we ask questions ranging from how much are spent on groceries to how much is spent on shopping and entertainment. Once we drag the women folk in our discussions, we prod them with questions on their short term and medium term requirements.

This leads them to goal based investing approach of financial planning without realizing that they are doing what we financial planners want them to do.

But we need to know the importance of money management for women and also move beyond this state of affairs.

A woman in every household needs to know her personal net worth. She needs to understand what the basic asset classes are meant for and where the family’s money is invested. She needs to know how the investments are being done and in whose name.

Ask your self the below questions. If any of them is a no, apply yourself to learn about managing your money.

1. How much do you need to save for retirement?
2. Can you maintain your lifestyle if you were to be divorced today?
3. If your spouse is not around, can you pick up on the household finances effectively?
4. Do you know where your investments are?

In case of scenarios where the husband was to pass away suddenly, the women will need to take ownership of the household. Finance is the only thing that will see her through tough times – the moral support will not fetch her and her kid’s a good living – she will need hard cash for that.

The importance of money management for women should not be learnt by her only in case of emergencies; it should become part of her daily life – in the same way making tea for the husband is or cooking a favorite food for her child is.

India’s joint family system is now a fading certainty. Job opportunities and a self imposed independence regime have meant the woman stays away from her immediate family at a distant city with friends or her husband, if married. But every good thing in our lives is complicated with something so silly, you cannot sometimes believe the irony.

So with this changing lifestyle, the risk that the woman is subject to financial hardships and challenges is more.

Divorces are separating couples faster than ever. A divorce means splitting of emotions, family and finance. The latter can be so crippling that a woman might have to change her lifestyle massively to adjust taking all expenses herself. That is not easy.

Road accidents and health ailments are also on the rise. In such situations where the spouse is bedridden, a woman has to take charge of her finances herself. She can only be successful in her life if she teaches herself personal finance over a period of time.

Another thing to be noted is that thankfully, we women will live longer than men. While that ensures that we will have a ball of a time in the last few of our years, it also means that we will be responsible in managing our finances when our spouses are not around. Isn’t that a big reason for you to start learning the importance of money management for women now ?

If you are a woman like me, and if you are single or married, working or not working, follow these points to teach yourself about finance starting today.

1. Get to know of basic asset classes.
2. Learn about what life insurance is. It’s so simple but is complicated by various types of life insurances especially ULIPs. Read up on term insurance and shut the door to the rest.
3. Shut the door on stocks. Yes, you are reading right. I said stocks, not husbands.
4. Learn about systematic investment planning of equity diversified mutual funds.
5. Read about some debt products like PPF, NPS and debt mutual funds.
6. Learn about investing in Gold via ETFs or jewellery. OK, it’s the latter, I know.
7. Do simple budgeting for managing expenses, save a decent part of your salary (we recommend 25% minimum).

Enjoy life being a woman. Let the men enjoy the Maruti SX4 !