We don’t think of outsourcing our health to anyone else to manage while we may take advice and assistance. So, why should it be different for wealth?
A recent survey by an insurance company in India finds that 59% women do not take independent decisions on their finances, even if they are financially independent. Surprising, as for generations, women have successfully handled and demonstrated their proficiency in managing household finances. Often, it is the homemakers’ kitty, which has been carefully accumulated through meticulous planning, investment, and budgeting that comes to the rescue in times of emergency. The truth and the size of this was brought into focus during demonetisation.
Is the finance management then limited to cash and gold/jewellery? Or to bank fixed deposits? Is it that the newer age elements of money management, with market risks are daunting? Is it that the risk is less understood and so, there is a hesitation is making decisions? Is there fear of the blame associated with any financial loss?
Finance management does not have to be so complicated and in case of a choice between risk aversion and outsourcing of money management, the recommendation is still towards risk aversion with ownership of money management.
Why The Pentagon of Proprietorship
Let us use The Pentagon of Proprietorship to explain why women must take control of their finances and participate actively in the decision-making process.
Each of the reasons has the same importance as the five equal sides and angles of a pentagon. And just like the five equal triangles of a Pentagon, cover five equally important areas of life.
Plan: A woman needs to invest time, effort, and money into planning her own life goals. Be it working women or home makers, they need to plan their finances to ensure they are not completely dependent on their spouse, children, or any other individual financially. While investment tools and frequency will vary for women with diverse backgrounds, systematic planning is equally important for all.
Protect: Women often give up their jobs to look after home and family. Some take extended career gaps, which further widens the pay parity gap at workplace. This reduces the earning potential and lowers retirement savings. They need to protect the financial worth, that they have comprised for other priorities.
Provide: Women are often charged with the responsibility of managing finances and providing for the household expenses and the educational and medical expenses. By controlling the finances, they can ensure a better asset allocation tailored to the short term and long term needs plus the emergencies.
Power: One of the key benefits of taking control of one’s finances is the sense of empowerment that it brings. When women take charge of their finances, they can make informed decisions about how to manage their money, set financial goals, and make investments that align with their values. This can lead to greater financial confidence and a more positive outlook on life.
Promote: By controlling your finances, you promote the cause of women empowerment. You become a small but significant agent of change. When women have access to financial education and resources, they can make informed decisions about their money, which can lead to greater financial stability and security. This, in turn, can help close the gender wealth gap and create a more equitable and just society.
Money is freedom. Start small. Take help from professionals. No one understands you like you understand yourself. Therefore, you are the best person to make decisions that involve your personal concept of value for money. Understand your needs, evaluate your income and plan accordingly. There is a plethora of options for investing your hard-earned money. From the humble savings bank account to the popular fixed deposits and insurance plans to the seemingly complex mutual funds and equities; you can do it all.
(The author is MD & CEO at IndiaFirst Life Insurance.)