I have always wondered. We women are ‘mean’ budgeteers of our households – capable of stretching and scrapping in seemingly impossible ways to make a little go a long way. Then why is the situation so abysmally poor when it comes to our own financial awareness and independence?
Financial literacy amongst women, especially in India, is abysmally low. I mean, when I tried to find out exactly where we stand, I was not expecting a lot. Even so, when S&P’s Global Financial Literacy survey popped out the figures at me – that a whopping 80% of us in our country lack awareness about finances, honestly, my jaw dropped. Even more unbelievable, the number stands at ~70% for the US, the country where 51% of women are a part of the workforce. It seems as if we, the women of the world, stand united in our appalling low awareness of our own finances!
By financial awareness, we are not talking about all the fancy and most times, complex financial products and investment options. It is the simple knowledge of how our own (or household) finances are being planned and invested to achieve our current and future obligations.
Allow me to illustrate this with examples. Are we aware how the household money is invested? Is it all in bank FDs? Do we have funds? Or own stocks? Land? Another one – we all have (and use!) credit cards. Do we know how much is the annual interest that is charged on outstanding amounts? A whopping ~40%, irrespective of what bank you favour. One more hard hitting one – Do we know what we will do in a situation where the primary earning member of the family is no more? We might have a comfortable life right now based on current earning capacity, but is our future financially secure? Will we be able to take care of ourselves and our child (children) in adverse situations, or be dependant on relatives, or even worse, portfolio managers/ advisors, we know nothing about?
Imagine, the above are some of the questions that ~80% of us have no clue about whatsoever! As more and more of us stand together for equality and recognition, the involvement of women in personal investing becomes crucial. It not only provides for future financial security, but also a chance to have a say in appropriating the household finances towards the various financial goals, through the best suited investment options.
So how and where do we start? I’ve tried to put together a few small steps with my own limited experience and hope it helps begin the journey.
Learn, learn and then learn some more
As with everything in life, good decisions cannot be taken without correct information. In investing, particularly so, attempting to do otherwise is catastrophic. The first step would be to understand and map out the current financial situation – budget – income, expenses, financial goals. Next comes learning about the various investment options. In today’s day and age, numerous online resources are available sharing basic knowledge about products, etc. Also, if your means allow, it is not a bad idea to do a beginner’s investment course. Almost all online education portals, and major brokerage firms have one. This will also allow you access to a mentor and a community for discussions. Not all options work for everyone. The idea behind knowing them is to then figure out what is appropriate in a given scenario.
Request for support and find your ‘backer’
“Why do you worry about such things? Don’t worry, everything is set up and under control. You just focus on your work (or study, or kid(s)!)” – How many of us have heard this when we try and initiate the ‘finances’ conversation in our households? Planning about the family’s financial well being is a task for the whole family, and each adult member should be aware of it. Once we take the first step, and maybe, insist a little on knowing, we will definitely meet with acceptance. An easy way to slide into the scheme of things is to earn the support of at least one family member – it can be a parent, parent-in-law (even better!) or your partner. This helps to learn better and boosts confidence significantly.
Set up the proper tools, access and processes
Another bit of trivia. You’d be surprised to know how many women, even the ones who work, do not have a basic savings bank account of their own, just a joint account for ‘expenses’. Open one, today. And link it to a brokerage account. You might not use it, but no harm in having one. The simple act of having one’s own account and saving money in it will feel like an achieving for many! Small portions from this kitty can be used to invest in basic instruments like FDs, mutual fund SIPs, etc. Even if you don’t wish to start investing on your own, you should have a complete picture of the family’s investments and current financial standing. And it is absolutely essential to have a nominee for each, it will save tons of hassle later!
Resist the urge to change everything once you start
Once we have all the information and all processes are set-up, we’ll itch to try out. By all means do, but start with small amounts. One shouldn’t aim for a complete overhaul from the get go. And it might also not be cost or tax advantageous to change the investment options all at the same time. It takes a while to understand the current options, and wait for them to show the expected results. Plus, whatever has been done before must have been with some strategy in mind. The goal should be to align it with your current learning and outlook going forward. Investing is not a race to be won. It is a slow and painstaking effort to ensure your and your family’s financial well-being.
Not all decisions will be great. That is okay
Everything in our portfolio cannot be a star performer! As long as we understand the implications of what we are doing, and not act on ‘gut feeling’ and ‘tips’, over the long run, we should be fine. We will make some mistakes along the way – need to realise that, make amends and move forward. There might also be times when one might feel like, or be forced to give up this quest for financial awareness and independence. Don’t give in to that. Go back to your ‘backer’. Drum up some support and encouragement. Learn some more and get ready to try again. Each failure is a lesson learnt. Done and dusted.
Join a community – Have conversations, share ideas
As we slowly understand and appreciate the world of personal finance, we should share ideas and new launches. As I mentioned, joining a student community is one of the best ways to be a part of such forums. Many successful investors also have their own blogs and communities, where readers can share their views and learn from one another. It is sometime easy to discuss personal finance rationally with people who don’t have a stake in what we are doing – it can give us a much-needed impartial perspective. Also, give back. Act as a mentor for those who are just starting out on this journey. It will be immensely fulfilling.