What probably triggered this article is my meeting last month with Smita, whom I met to sort out her money matters after the recent death of her husband. She was in her late forties, with 2 teenage children to take care of.
She had 2 main concerns – First, she wants to invest the money to be received from her Husband Insurances to generate monthly income to support her goals and Lifestyle, and second, she wants me to “trace” other Investments in the name of her husband.
She knew he had one demat account and used to invest in stocks and mutual funds, but that’s it. Neither she had ever asked, nor had he ever told.
Tried working on her first requirement, and did some calculations after understanding her monthly expenses and children education-related goals. And the findings were quite shocking to her. The corpus which she expects to have from Insurances and her husband’s employer would help her maintain the current lifestyle for next 5 years only, and she had to compromise on her children foreign education goal too.
Though we were yet to trace the demat account and mutual funds which may or may not have the required money, that is something she was not aware of. So, for now, the options left before her was either to reduce her monthly expenses and curtail the goal amount, or start working and bring some money in the family.
So, who do you think was at fault in this story? The one who may have invested in many things but forgot to educate the stakeholders on how to make use of them or who to approach in case of any eventuality, or the one who took everything for granted and did not participate in the financial decision making to later find herself in a catch 22 situation.
This is not a unique case. In the Indian Kind of society, women do not take interest in Family’s financial matters. Even a working woman wants her father or husband to look into the money matters and hardly participate in investment decisions.
A few weeks back there was one survey of well-educated working women published in a leading business newspaper, where 92% of respondents admit that all financial decisions in their family are taken by the male members (father or husband). Nearly 83% did not even know any investment product beyond bank Fixed deposits and Post Office schemes. Most of them were not even aware of how the EMI works in a Loan, How taxation is calculated from their Income. ( Read: What is Equity?)
A thought comes what is wrong with depending on husband or parents for money management; after all, they will do for her betterment only. I respect this thought, but sometimes in some cases you never know. And what if they are not there as in the case of Smita? Or become dependent on her?
And what if she was forced into a situation where she had to make independent decisions, impacting her life. Death, Disability, Divorce, Distress…all are realities. You can run but you cannot hide.
Whose responsibility is this? The one who wants to ensure the security and safety of the women in the family or Woman herself? I think both.
Making Investments, writing of WILL, Buying Insurances etc. all are of no use if the beneficiary does not even know what to do with the money when received. By doing this, in the case of your absence, you are leaving her to the mercy of the cruel world where she can be missold with any product, and not knowing how to work on the money matters for her own future.(Read: Misselling or Misbuying?)
For a Single Woman / Single Parent, there is a double responsibility, as she has no one to put blame on.
Things Men should do to ensure her Financial Independence
Make her join you in your bank visits, ask her views on your insurance purchases, your investment decisions, make her participate in the Financial Goal setting. If she is going to be the nominee in your financial instruments and beneficiary in the WILL, she needs to know whom to contact in case of an eventuality, and how to make the best use of the funds she will receive. Have a written financial action Plan at place, which both of you should follow to have a great financial Life
Things women should do to ensure her own financial independence
If you can make him choose the next family holiday destinations then why can’t you help him select the suitable insurance or investment plan, which is for your own financial security only. And why him only, you also need to be insured adequately so his responsibilities can be taken care of if something happens to you.
You should also know how your husband’s bad financial habits can spoil your own credit score if you are a joint borrower. You should know the implications of not having adequate insurance cover, wrong investment products, going high on loans, having a skewed asset allocation, not being aware of your spending habits etc.
It is about you, so you need to be sure on how to manage the money in case you alone are asked to do this. You have to be aware of what is going where, what investments you all have and why?
Nurturing is in your DNA. Women do wonders in Investment management. You actually think Long term and this will help your family to save more for the future by keeping the financial mistakes in check. Moreover, this is for your own financial Independence.
Hey women, even if you are a housewife or working or even Single, a daughter, Daughter-in-law…you have to participate in the financial decision making of the family, for yours and your family’s financial betterment.
This article on women financial Independence was originally published in Bemoneyaware