Financial planning for women in the aftermath of losing a partner

In the event of the death of a spouse, taking charge of finances can seem an impossibly difficult task for women, especially if they have never been privy to the intricacies of financial management.
Taking stock of your assets and liabilities, collecting bank statements, investment and property documents and checking insurance policies is sacrosanct before taking any financial decisions.
Taking stock of your assets and liabilities, collecting bank statements, investment and property documents and checking insurance policies is sacrosanct before taking any financial decisions.
Published on Mar 22, 2022 11:23 AM IST
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ByHT Brand Studio

“I lost my husband during the second wave of the pandemic in India. He was just 40. In just a matter of a few days the lives of me and my children were thrown off gear completely. Things have been incredibly hard – the emotional upheaval and the grief has coloured all aspects of our lives and healing is going to be a long journey. Matters have been complicated on the financial front too since his demise,” says 35-year-old Sumita Chakaraborty, a software engineer based in Delhi.

According to the United Nations, India is home to almost 42 million of the world’s 115 million poor widows. In 2015, the World Economic Forum citing a study conducted by the Loomba Foundation stated that one in seven widows globally live in extreme poverty and India, with an estimated 46 million widows, has overtaken China (44.6 million) to become the country with the largest number of widows.

Historically, widowhood in India has been a harbinger of acute social discrimination and suffering for millions of women. While things have improved thanks to a slew of court rulings, policy changes by governments and awareness about the evils of stigmatization of widows, life after losing a spouse continues to be marred with sufferings for countless women. And one of the main factors that becomes an important determinant in the quality of a widow’s life is finances.

In India, where women continue to be deliberately kept away from reins of financial management or do not have any degree of financial independence, the death of husbands forces many into poverty. Yes, change is underway with more and more women joining the workforce and choosing to establish their careers before getting married, no amount of preparation can make widowhood easy for any woman. Chakraborty, a mother to two boys aged 6 and 3, says, “Thankfully, I was earning enough to be able to provide for myself and my children after my husband passed away but that sense of financial security vanished after my husband died. The insurance, savings and investments left behind by my husband aside, I know things are not going to be the same as with me being the sole breadwinner for the family. I have had to cut corners sharply and it would be a lie to say that the quality of my life hasn’t changed.”

In the event of the death of a spouse, taking charge of finances can seem an impossibly difficult task for women, especially if they have never been privy to the intricacies of financial management. As such seeking help from a trusted friend or family member, especially in the initial days in the aftermath of the tragedy is crucial. “Taking stock of your assets and liabilities, collecting bank statements, investment and property documents and checking insurance policies is sacrosanct before taking any financial decisions. However it can be a herculean task considering the grieving widow’s mental and emotional condition. It is best to make someone trusted help you out with the process of assessing your financial situation,” Chakraborty suggests.

After she was able to gain the complete picture of her finances, Chakraborty says the next important step was for her to decide how to manage and nurture the corpus left behind by her husband. “I sought advice from a professional to lay down the roadmap for managing the existing corpus. Based on that, I drafted a plan which entailed continuing with some of the low-risk investments that my husband started while channelizing portions of it into other asset classes because now my risk profile and my goals had changed drastically. I knew that in the sufficient capital appreciation was my biggest concern given that I had to educate my children and also prepare for my retirement years with only my income to rely on and so I started SIPs in equity mutual funds for that I also invested in debt mutual funds to amp up my emergency reservoir in the short term and they also helped augment my income.”

Aditya Birla Sun Life Mutual Fund has started a special initiative called For Her that focuses on financial inclusion of women and intends to provide them avenues for financial security.
Aditya Birla Sun Life Mutual Fund has started a special initiative called For Her that focuses on financial inclusion of women and intends to provide them avenues for financial security.

Neha Nagar, founder of Taxationhelp.in says, “Nothing upends the world of a woman like the death of her husband, leaving her at a loss for what to do next. After the demise of the spouse, women should start the process of filing a claim on the life insurance policy if the husband one. They should also initiate claims on their late husband’s provident fund. The next step is to make a list of all the important monthly expenses and income sources. Divide your expenses into three categories: most important, less Important and unnecessary ones or needs, wants and luxury. Use the 50-30-20 rule - 50% of your income should be spent on your needs, 30% for your wants, and 20% for investing. If you want to spend on luxury items, you will have to use the money from that 20% bucket and it is better to avoid doing that because it is that bucket which is going to build your financial safety net for the long term.”

Key Takeaways

- It is of paramount importance to have your medical and life insurance in place, to ensure that your dependents are not left out in the cold in the unfortunate instance of something happening to you.

- If you feel that your financial situation isn’t comfortable enough with your current income levels, then you can find an occupation if you haven’t been working or find ways to supplement your income by taking up freelance jobs and the likes.

- Taking stock of your assets and liabilities, collecting bank statements, investment and property documents and checking insurance policies is sacrosanct before taking any financial decisions.

- Make a list of all the important monthly expenses and income sources. Divide your expenses into three categories: most important, less Important and unnecessary ones or needs, wants and luxury.

- Start investing in SIPs in equity mutual funds and also debt mutual funds to amp up emergency reservoirs in the short term. These can help augment your income.

This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.

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Wednesday, May 25, 2022