23 May, 2011

Women and Finances

Their classic aversion to finances is a byword. But they cannot afford to ignore their finances, in their own best interests.

I was recently called upon to address about women’s needs regarding finances. To set the ball rolling, the organizer started off with the important role a woman plays - as a mother, sister, wife & daughter and increasingly as an income earner.

Therefore, she concluded, it is very important for women to understand finances, given the multiple roles they juggle and the stakes they have. Fair point. But I felt this discussion was veering off from the most important fact that, everyone needs to understand finances, not just women alone – else, they would mess up their lives.

Even men play multiple roles as father, son, brother, husband. They also work for a living. It is pretty evident that they juggle with multiple hats too. They need to understand finances too. Hence, it is not a man or a woman thing. Testosterone or Estrogen does not decide whether a person has interest in finances. The need for awareness and ability to proficiently manage personal finance is needed by everyone.
Women can understand a financial product, as well as the next man. They could quite competently evaluate them and take informed decisions, if they choose to. It is not a question of competency at all. Women are everywhere today, including finance area. We have scores of them in high profile positions as CEOs of Banks, analysts, economists, fund managers etc., which are hardcore finance professions. We have a woman financial planner, in our firm. So women-and-finances-are-poles-apart argument, does not work.

The fact is that many of them are just not interested. They have switched off finances from their lives. And have given the control of that to their father, husband, whoever… Probably, that is what the organizer wanted to highlight and give a clarion call.

Confiding in their close ones, is fine; abjuring responsibility in that area or blanking out finances, is entirely another. In our Financial Planning engagements, we find that it’s mostly the menfolk who take active interest. We request for a joint meeting to make the lady of the house understand where they are and what problems they are facing and what we propose to do for them. Mostly, they don’t come. Even when women attend discussions to go through the plan, they are mere, passive observers, waiting to dash out of our office, at the earliest opportunity. Mobile phone and children present an ideal cover to slink out... and abundant opportunities are presented by the nifty gadget and the mischievous children. That saves them the trouble of stifling their 40th yawn and wiping the tear from the corner of the eyes, ever so often, with that teeny-weeny kerchief.

But, this attitude is self-defeating. We want them to understand the blue print we are creating, investments/ insurances they have, the calculations we do to arrive at certain conclusions, our recommendations for them… Financial Planning, I agree, is a bit dense.

A working knowledge of finances and a disposition to learn, helps. This will help in avoiding, say, plonking a huge sum in an insurance plan to save tax, because someone had approached all the ladies in the office and had committed to give the proof of investment, by the next morning. What the plan is all about or whether it is suitable at all, is not looked into. It happens to a lot of men too.

A poll conducted recently suggests that Indian citizens are confident and competent in handling personal finances and are near the top of the table. I don’t know how they went about their polls. But, if indeed the awareness levels can be considered very good, then I despair about the citizens of other countries, bringing up the rear. I would just say that their sample probably consisted of financially well- informed individuals and may not be representative of the entire population.

Knowledge is power. It is essential that one has a bit of financial awareness and knowledge, enough to understand and evaluate the offerings. This will enable them to take decisions that don’t backfire like the bofors gun. Last minute investments invariably go wrong. Starting off the block early, helps. You don’t have to like Finance. You have to have enough working knowledge here, to competently handle your affairs. Know to ask the right questions. Start reading the personal finance pages of magazines/ newspapers. Switch on the TV and absorb some of the discussions on Personal Finance.

You are working for money and what it can provide you with, right? Why then treat it like, what the cat brought home? Money is not a man-thing. It concerns us all. It makes the world go round!

Article by Suresh Sadagopan; Published in The Economic Times on 10/2/2011

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