A woman’s role is equally essential in investment planning, having her take charge could bring about a colossal change in the way finances are managed.
By Tarun Birani
Financial freedom is not just a laundry list to follow, but a practical road map to living life on your terms as quickly as possible. It is a means of transforming your relationship with money. But how does that work when more than one person is involved in contributing to the income and managing your finances?
The discussion on finances between couples may not always be an easy task. Nevertheless, it is an essential one that should not be postponed. Beginning to save at an initial stage is key to gaining traction from your early working days. But most of all understanding each other’s capacities to risk, save and invest is what makes this journey simpler.
No matter how progressive India has gotten as a country, men are still the bread earners while women are considered the nurturers. Hence, in terms of financial literacy females are yet to make their mark. Essentially this is one reason why women are more likely to shy away from taking the reins in handling finances.
Where to begin?
Once a couple is deeply invested in the relationship, their journey to invest in savings too must begin; the earlier the better. Communication here plays a vital role, each partner will have his/her own goals, avenues, preferences, and aversions based on their past investment experiences. Their ability to proactively discuss and quickly conform to a set of common goals and plans will set the pace to their investment decisions in the future.
Only 33 per cent women take independent investment decisions compared with 64 per cent of men.
A woman’s role is equally essential in investment planning; having her take charge could bring about a colossal change in the way finances are managed. Women have proven to maintain that discipline, but have been doing so by investing in traditional instruments like fixed deposits, recurring deposits or chit-funds. A joint decision-making-process definitely helps women slowly and steadily test the waters of the SIP or mutual fund investment pool that she once may have found intimidating. The longevity and adherence to investment plans depend on a mutual understanding by both partners to the set financial goals and their yearning for financial freedom.
When a couple decide to consult a financial advisor to discuss their future investment plans, beyond the planning and goal-setting, They should direct the financial advisors to ensure that additionally risk profiling for each of them is done individually to help them achieve both their common as well as personal goals.
While a couple may discuss their investment plans together it is important to additionally be open about each one’s personal past experiences and financial history. Having separate financial accounts tends to get tricky and complicated in relationships.
Similarly, getting rid of debt of either or both partners before beginning to invest must be prioritized and worked on as a common-objective. Having a joint investment goal, while one partner is repaying high-cost-debt and the other is investing, dilutes the value of the interest earned on the investment.
Also, for insurance needs, if both partners are adequately covered by their employers and can guarantee their income is replaced in case of any unfortunate event, then they can choose to better invest their term policy payments instead and gain from it.
The financial requisites of men differ drastically from women, their responsibilities, career paths and goals, dependents, etc. To gain the most out of your investments, discipline in investing by both partners is essential. This exercise of goal-setting and future planning gives rise to a basic understanding of where they stand financially and what they could do to rise above, be it honing a skill, switching career paths or venturing into a business while one of them continues to hold a steady income.
Acceptance from women and their openness to invest in avenues beyond traditional instruments is integral. This clarity and co-ownership by both partners ensures accountability in routine investments and assurance of a trustworthy partner to bank on and ensure right-decisions are made. A goal-based approach to investments can ensure couples stay on track and routinely invest their savings.
An online mutual fund platform report states that the average Indian woman invests 12.7 per cent more than her male counterpart. Their progress is evident and their ability to make smart investment decisions. Indian women have proven to be steady investors when compared to men; they are more likely to systematically plan ahead and consistently invest to meet their monthly goals.
( The author is Founder & CEO, TBNG Capital Advisers)