Time to talk about financial independence, woman!
A mother of two kids and a doting wife, Bengaluru-based Sangeetha Ganesan tries hard to meet their financial obligations with her husband’s meagre income. Though she doesn’t have much to complain about, the 38-year-old woman says, sometimes, she feels left out and financially insecure. “He is a caring husband and a good father, but when it comes to money, I am feeling very uncomfortable and awkward asking him for the money,” she says.
This is not the case of Sangeetha Ganesan alone. There are many women like her who are dependent on the husband for their basic financial needs. Not just housewives, even working women do not have the financial independence as they end up giving their salaries to Gatekeepers- brothers/husbands.
A report titled 'Women and Money', published by the Gates Foundation, quotes a woman named Indira from India. She says, "If I need money, I would ask my family, but I'm hardly able to give if they need it."
The report says that Money is the domain of men. Society doesn't view it as a woman's role to earn money, or her right to make financial decisions.
Bill & Melinda Gates Foundation's India Report, ‘The Financial Agency of Women’, released in 2019 says that women are told that phones, banks and services are too smart for them. It quotes a World Economic Forum report that says 74% of women are not employed, compared with 25% of men. For rural Indian women, the gap between their lives and digital financial services is vast, the report says.
Women have been told that she should look beautiful and attractive, and all her focus went only on those two aspects. Of late, women have started focusing on being self-dependent and financially secure.
Understand the term ‘Financial Independence’
For women to feel financially secure, they have to understand the term ‘Financial Independence’, which is about deciding what to do with their money. This applies to both working women and also housewives. This awareness can help women not just save money but also invest in various financial instruments.
Investment advisor Dev Ashish says women are not just the stronger but also the superior half of our species. Being financially free generally means reaching a life stage where your financial assets are sufficient enough to allow you to not work just for earning money. But financial independence for women means something different. And a lot more than just having enough money in the future. It can be about having the independence to earn and manage their own money in the present itself. At times, it’s more about having economic independence in the present and not just the so-called financial independence in the future.
“Due to our society’s archaic ideas about what women can do and what they cannot, and at times due to women’s own choice, many women keep their distance from money matters. It’s very important for the women of the house to participate in money matters. They may not be interested in it and may want the men to manage money in its entirety. But this approach isn’t correct. It increases dependency on one person and that is not advisable from the risk management aspect as well,” StableInvestor Founder Dev Ashish adds.
Graphic designer Kavitha Ravi says women should never leave all financial decisions to her husband after marriage. “I have seen many of my friends just handing over all their income to their husbands. They should participate, and even if they don’t like it, they should develop interest in understanding various investments available.”
“Women can bring in a completely different perspective in money discussion which men miss very often and that can be very useful. Both men and women should participate in handling family finances,” Ashish says.
Start an SIP
One of the things that every lady should work towards having is an Emergency Fund. It doesn’t have to be a huge amount. But having some buffer really helps in times of need. The money for emergencies can be gradually accumulated over time using simple RDs, FDs, or even debt funds. It may seem daunting at first when you begin. But gradually, it will swell into a sizable amount that can be your and your family’s financial cushion.
Apart from having a contingency buffer, for long-term investments, women need to look at equity mutual funds. These provide inflation-beating returns in the long run and one can easily invest a small regular amount via monthly SIPs (Systematic Investment Plan), Ashish explains.
Nitish Purohit, Partner at JNV Financial Services says instead of keeping the cash in the almirah or just in a savings account, women should focus on investing the money. Unfortunately, only a few women see mutual funds as an investment tool and it is due to lack of awareness. SIP is a fantastic tool and even a housewife can start an SIP with her savings. It is really important for working women to start investing through SIPs at an early stage.
Know about ‘DIP’
It is important for any investor to understand the concept of DIP- Delayed Gratification, Impact of Inflation and Power of Compounding.
Investment advisors point out that one should continue reinvesting earnings received on investments. This will accumulate wealth and if you commit to this saving regime, the more successful you can become in growing wealth.
Also, investors need to delay gratification. If a fund provides them over 20% return, instead of redeeming the amount, investors need to resist the temptation and should let the fund grow till the goal is achieved. Always think of your long-term wealth accumulation and get rid of impulsive spending. Also, calculate the impact of inflation while investing. Women should invest in equities, mutual funds that can beat inflation and help them in retaining or boosting their living standards in future.
Nitish Purohit says liquid funds can help women investors in managing the regular cash flows and generate approximately 1% more than savings account interest rate. Women investors can think of parking their money in liquid funds instead of a bank's savings account or fixed deposit account.
Also, in case of any emergency, investors can redeem partially or fully the required money.
Irrespective of their marital status, women should get involved in money matters. Only by handling money, their confidence level increases. Also, instead of just saving, they should consider various investment options that are available.
1) Don’t abruptly close your individual account after your marriage.
2)Even if you are not interested in managing finance, take small steps to understand various financial instruments that can help grow the money.
3)Be it housewives or working women, SIP is a good option for them and if you start early, you can gain maximum returns out of it.
4) Liquid funds can help women investors in managing the regular cash flows and generate approximately 1% more than savings account interest rate.
This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.