With some effort to educate themselves financially women can achieve true financial empowerment, which is more satisfying than financial independence
By Shailja Agarwal
Despite India boasting of a woman Finance Minister, at the household level, many women still remain focused on the domestic front. It is not hard to find a household with a women breadwinner, where the finance portfolio is entrusted to the man of the house. This gender asymmetry in investing decisions at household level can be attributed as much to entrenched societal mores as to inadequate financial knowledge in such women.
But take heart! The good news is that with some effort to educate yourselves financially, you can achieve true financial empowerment, which by the way, is not just better, but also much more satisfying than financial independence. But how? Here is some advice:
You can do it
Sounds clichéd? Fair enough. But do you realise you have always been doing money management for family expenses so well? So you are already on a solid footing! Build on this innate flair. What does it take to navigate the world of investments then? It requires you to develop familiarity with how it works. Educate yourself by watching videos, reading articles, attending webinars, etc. Do not let the fear of the unknown deter you. Remember, it is always difficult before it is easy. And it will be worth it.
If you can’t beat them, join them
Make sure to participate in the investment decision making of the family. Sit through that meeting with the family financial advisor. Ask questions every time you do not follow. Try to figure out the big picture as well as important details. Apply the basic framework of budgeting, goal setting, identifying the risk-reward, planning for emergency on every decision being made.
Learn the difference between savings and investments
Traditionally, women have had a great knack at putting away some part of their cash inflows and surprising everyone with unprecedented help in times of a family crisis. Some stashed these savings under the mattress while others at best put it in a savings bank account because they did not know better. Alas, both the options made sure that inflation eroded the value of these funds. Remember, your money in bank accounts including FD rarely earns enough to beat inflation. So bank deposits are not really investments. So is an insurance policy. An investment is something that earns you enough to cover rising prices and still leaves something on the table.
Ensure that rainy day and golden years are covered
Irrespective of who brings home the bacon, see if the family has an emergency fund that can last six months of household expenses. This will cushion your finances in case of temporary loss of income. Also see if you have sufficient provisions being made towards a retirement corpus. Take help of various financial websites to compute how much you need to invest to reach a retirement goal. Generally, liquid mutual funds are best for emergency funds and equity mutual funds for retirement.
Additionally, it is very important that you know the details of investments and bank accounts of the family so that you are not left high and dry in case of an emergency.
Despite the all-round headway women have made, finance and investing somehow got left behind for many of them. Hopefully, not for long. It is not rocket science after all. Even if it were, women have already been to space and back.
The writer is associate professor, IMT Ghaziabad