In Indian families most financial and investment decisions are taken by men, which often create hardships for women later in their life
When it comes to finan- cial planning for women, the basics remain the same for both, men and women. However, financial planners say that the approach differs when one considers the fact that the habit of savings is ingrained in women much more than men, higher life expectancy and a relatively lower knowledge of finance and investment.
The basics of financial planning requires one to first set the goals for investing and the timeline to achieve those goals. Then the person needs to look at his/her cash flows to decide how much one can save and invest. The next step is to create an emergency fund with a high degree of liquidity. Then the person should have life insurance and health insurance plans. The last but not the least is to write a will.
In addition to these, every woman should also keep in mind a few more points. According to a financial planner, in Indian families, it is mostly seen that the decisions about finance and investments are not with women, but men. On the other hand with the life expectancy of women in India a couple of years more than men, in the later part of their lives, women live alone for a few more years. With relatively less knowledge about finance and investing, they face problems. The situation is aggravated by the spread of culture of nuclear families in India where children, after they grow up and
start working, also live separately. So eventually women, in their old age, are increasingly finding it difficult to man age their finances. So it’s important that women start participating in the financial planning process in a family.
The other issue is that despite being a natural saver, women do not invest properly. “Of ten they park a large sum of money in savings accounts which actually destroy wealth in the long run. They should start learning about investing through which they are able to get better returns and also build wealth,” a financial planner said.
Financial planners and advisors also point out that an increasing number of women are becoming single mothers. Also there are cases where either they don’t have enough financial support or the financial support is not regular. To avoid any such hardships in the future, women should start learning about finance, investment processes and financial planning early in life. People from the financial planners and advisory business also said that they have often been asked what a widow should do about her finances after the sudden death of her husband. “In most cases we find the lady doesn’t know what to do. Also they don’t have any idea about where and how her husband had invested when he was alive,” said a Mumbai based financial planner. “To avoid such situations, women should insist on being part of the financial planning process for the family. And the husband should also keep his wife in formed fully about how and where the money has been invested,” the financial planner said.
To address this situation of women not aware of the family’s investments, several of the financial planners and advisors are now insisting that when a financial plan is being made, the husband should be accompanied by her his wife and if they have a teenage child, then that child also. They say, after all, financial planning is for the family and not for an individual.