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Money lessons for women

Amar Pandit | September 29, 2008 11:42 IST

"It's a Man's world" is an often repeated cliche. However, things have changed to a great extent and urban women are enjoying more economic prosperity now. In the last couple of decades, there has been a tremendous improvement in the ratio of women entering the workforce.

Richa Joshi (name changed) in her thirties is a corporate executive. While she is quite comfortable with managing the day-to-day expenses of the family, she has never bothered to manage her own money. No wonder, she has no idea about the insurance, investment and taxation details of her family's money.

Earlier, the onus was on her father, and now her husband's chartered accountant does the needful. As a result, she is completely clueless about her investments and joint investments. More importantly, she has no idea about the family's liabilities.

This is a common story. Not just women, but many men suffer from the same malaise when it comes to managing their own money. They depend on others, like family members and other professionals.

While managing daily money is no mean task, it is important that Joshi takes control, or at least inculcates a strong understanding of her overall financial situation. Of course, there are movies, where it is heartening to see women taking active interest in the Sensex stories rather than the Saas Bahu stories. But most of this interest gets only accentuated when the Sensex is on an upswing.

Typically, most women tend to focus on their family's immediate or short-term needs such as day-to- day expenses, lifestyle purchases and, at best, vacations. What they lose out is their long-term financial goals, be they retirement, financial security or financial independence. Though it may sound cliched, it is necessary for a woman to attain these three objectives. Whether married or not, working or not, every woman must plan for the long term.

The following are key questions every woman must ask herself:

  • What if something were to happen to my spouse today? Will the family be able to live as well as we are doing today?
  • What are my savings and investments? Are my investments relevant to my financial situation?  Are my liquidity, income and growth needs taken care of?
  • In uncertain times, how long can the family survive? Do we have enough contingency funds?
  • What would I do in case of an unfortunate incident like a divorce or a separation? Will I be able to maintain the same lifestyle?
  • Am I up to date with the skills that are required in the job market? As many have found out, after marriage and children, when they come back to the market, they are completely outdated in terms of the skill set required.

As it happens, in case of an emergency, many discover that most of their investments are in tax-savings instruments, earning returns of just 4 per cent a year. Even if there are investments, they were made in a haphazard manner and do not yield great returns. The situation is often worse when there is a loan hanging over their head.

It is imperative, therefore, that women maintain their own balance sheets. This would make them aware of the funds in their name. They should be aware of any joint investments and have access to the necessary documents. Also, if there are liabilities, there should be proper corpuses or insurance plans to deal with such situations. And most importantly, there should be proper medical insurance that will take care of their or their family's health needs.

Yes, while it's true that women are looking at everyday needs of the family, it's imperative as well that they keep a tab on their financial security to ensure a safe future.

The writer is director, My Financial Advisor

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