5 reasons why women should be integral part of family financial planning

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Published: March 12, 2019 1:28 PM

At the time of taking personal finance decisions – including financial planning, investments and evaluations – most women simply shift the responsibility to male members of the family.

financial planning, managing money, family financial planning, women investors, financial advisors, working women, personal finance, how to avoid financial distress, why women should take part in financial planninginstead of shifting the responsibility of managing money, women should take charge of their own finances.

An increasing number of women in India are getting employed and sharing financial burden of their family. Many women even occupy key managerial positions and take strategic decisions for the company they work for or for their own businesses. But at the time of taking personal finance decisions – including financial planning, investments and evaluations – most of the women simply shift the responsibility to male members of the family.

Take the example of a lady, who is a very good writer of personal finance stories and understands the financial matters and has even started few SIPs early to avail the power of compounding. However, she doesn’t know if the SIPs are in ELSS or in which category of funds, because she has shifted the burden of managing her investments to her father, who in turn manages her finances through his accountant.

In fact, both male and female financial advisors are of same opinion that, while addressing a gathering on financial planning, women take keen interest and show enthusiasm, but at the time of investing, they backtrack and ask the advisor to meet her husband or father or brother or any male member of the family before putting their money.

While there are cases, where women do approach financial advisors for investments, but again very few of them are actually eager of channelising their money for prosperity. In most of the cases women seek the help of financial advisors at the time of distress and without taking the ownership, simply want to shift the responsibility of managing portfolios to an advisor because of loss of the male member, who used to manage the portfolio and there are no other male members to look after it.

So, here are the reasons why women should take part in financial planning:

1. Equal partnership: When a financial planning is done, it is not done only for the male member, but for the entire family. Financial planning is predominantly done for long term targets like children education, their marriage, buying house, accumulating retirement corpus and risk covers. So, be an earning member or otherwise, woman member of the family should take part in the planning and should has her say on setting financial goals and choosing investment products. While women should not be fearful of financial matters and shy away, male members should take steps to ensure involvement of their better half by imparting knowledge and through encouragements.

2. To set trend: It’s a tradition that male members of a family handle investments, which makes female members complacent and they don’t just want to get into the financial matters. However, it is not a rocket science and by taking part in financial planning process, women may learn the art of investing that would instill courage and interest in financial matters. With size of families becoming smaller, it is very important to make female members of current and future generations capable of managing their finances by changing the tradition.

3. Taking ownership: By taking part in planning and execution, women should take ownership of the investments and in case of any mismanagement, shouldn’t just blame the male members, but give their valuable inputs for course corrections. Especially for working single women, it is very important to take complete ownership and control of their finances. Seeking guidance is no issue, but instead of shifting the responsibility of managing money, women should take charge of their own finances.

4. To develop relevant portfolio: It is said that financial advisory is more about managing emotions of the investors than managing the investments. Especially for volatile equity investments, managing emotions are more important. As women are generally emotionally stronger than men, they may become better investors, once they understand the equity investments. Moreover, women are more aware of the instances that may result into financial distress and hence would also insist for adequate risk covers to make the portfolios more holistic. Women also don’t hesitate to ask hard questions about need and nitty gritty of financial products to justify their presence in portfolios. So, it is very important to listen women members before developing a portfolio to make it more relevant for the family.

5. To avoid financial distress: Most women face the risk of financial distress in case of unfortunate demise of the earning member of the family because they don’t know how much risk covers are taken and how much investments are made, as they don’t take interest and participate in financial matters. That may lead to no or little risk cover to replace the loss of income due to demise of the earning member or the woman member may even fail to claim money due to ignorance of having any cover. Likewise, the hardship may increase due to lack of knowledge about how much investments have been made and where. Even if investment documents are recovered, lack of knowledge of financial matters would again make managing the portfolio a burden.

So, to avoid such situations, women should take part in family financial planning and take ownership of the portfolios.

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