Money Matters: How can women manage their own finances

However, when it comes to handling money, not all women are comfortable with the idea and majority of them prefer the male members in the family to take the lead

June 20, 2014 3:57 IST | India Infoline News Service
Women are excellent at multitasking. On the one hand while they can handle all the household tasks with ease, they are also able to achieve efficiency at work. However, when it comes to handling money, not all women are comfortable with the idea and majority of them prefer the male members in the family to take the lead.

Take an example of 31-year old Veena, married, who works for a corporate firm in Mumbai. Veena often juggles between family and work. This leaves her with very little time to manage her finances. While she brings home a decent package, she is often in a dilemma on some of the basic things like how to save, where can she save, how can she grow her money and so on. Her money is lying idle in her savings bank account, fetching her a four percent savings rate, when inflation numbers have already touched the eight percent mark. Veena prefers her husband to take the lead when it comes to managing money.

As the financial world is getting increasingly dynamic and complex, with constant fluctuations in market conditions and product specifications, financial experts are of the view that the best way for women to become more responsible and take the right financial decisions is through self education or getting advised by a trusted expert on basic money concepts and financial decisions.

Advises Rahul Parikh, Head, Aditya Birla Money- MyUniverse, Women should take ownership for their financial decisions, understand their own risk profile, goals, attitude towards investing and accordingly educate themselves on financial matters. With the help of various blogs, tools, calculators and other information available online, on various investment products, they can collect as much as information possible and later discuss it with a trusted financial advisor or an expert before taking a decision.

Women control the household budget in a very efficient manner and the levels of saving has a high dependence on their ability to manage the expenses. By helping her spouse in managing money better, working towards common financial goals, drawing budgets, participating in discussions with the financial adviser, she can get more efficient at it. All she would need is to take one step at a time, keeping her target in mind, to get her personal finances in place.

Women, by and large, always prefer saving instruments that yield fixed returns. They are more patient with their investments to stay through the time horizon suggested.

They are also comfortable with saving instruments that provide them with future security and money for personal goals like child education.

Hence it is recommended that women start off by first investing in plain vanilla fixed income products like fixed deposits, recurring deposits with bank and post office, tax free bonds and fixed maturity plans which will yield them regular cashflows.

Adds Parikh, These products are good options for women to start in as they are simple to understand and will give them regular income. Once they get comfortable with the concept of savings and investments, they can be gradually exposed to riskier products like equities, equity MFs, gold ETFs through SIPs.

Firstly, she should set up an emergency fund, take adequate life and health insurance and keep a regular check on the EMIs, even if she is not paying it. She should also keep an eye to invest in some tax saving instruments, for the long term.

As goals and objectives for every woman varies, it is important for her to make financial decisions based on the financial situation, life stage, risk taking ability and her goals.

For instance, the risk taking capacity, goals and objectives is definitely different for women who are married, unmarried, parenting a single child and so on.

Points out Parikh, Married women may generally have a second income from the spouse so they can afford to take more risks and invest into medium to long term products for their long term needs like retirement, child education. Those unmarried would generally be investing to take care of expenses or cash flows and accordingly may invest in relatively less riskier and regular income products. A single parent may also need to factor in the future security for herself and her dependents and hence may invest into extremely safe products and possibly also consider buying protection for herself.

It is vital that every woman understands the basics of handling finances. This will help her to avoid any unforeseen problems in the future. Women, if you still havent taken enough control of your own financial health, start nowsooner the better.

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