In most households women leave the personal finance matters to men. From managing investments to taking big financial decisions such as buying a house, availing loans etc. men’s have the final say. Very less thought is given by this section of society on planning for themselves. However, the lives of men and women differ in many instances which make it essential for women to either inculcate financial planning in their life or take equal interest in managing the finances when financial decisions are taken by men.
Here are few factors reasoning why there is a higher need of financial planning for women-
There are various research done on comparing the longevity of men and women. The statistics shows that women outlive men by approx. 4-5 years. When men are sole decision maker the entire planning is based on their life expectancy which may leave surviving female spouse in jeopardy after his demise. Consider age gap of 3 years between any couple, the life for women after their spouse is almost 7-8 years. Thus the need of regular income is higher in case of women.
2. Women Earn Less
For working women there are many instances like child birth, caring for parents/grandparents, caring for children’s etc. where she had to leave the job and concentrate on the family. At times some women become complete housewives if the raising of children is a grave concern due to the nature of the work of their spouse. This makes them exiting retirement benefits from their employer or discontinuing any contribution they would have making for their goals. All such situations leads to women earning less than their men counterparts and accumulating less retirement assets thus falling short of meeting their longevity risk.
3. Retirement Taken Care by Men
In majority of cases the planning for retirement is done by men and women has less awareness or is less concern about planning for retirement. The scenario can be somewhat comfortable in a government job where the family is entitled to pension after breadwinner but working in private sector things would be difficult if the early death of the spouse or situation like divorce arises. Less aware, a woman will not have any recourse to plan for her future.
4. The Insurance Myth
Working women will always have certain awareness about insurance. But in our country where most of them are housewives, the insurance for them is not considered. However, given the amount of task a housewife does it is actually the reason for most men focusing on their career. If something happens to her, financially, there will additional cost for all the work done by a wife while taking care of house such as child care, preparing food etc.,. All this indicates that the need of insurance is as much on women as on working men.
5. The Final Decision Maker
Although women lack awareness, most of the work related to household rest on them. Purchasing household items, managing school education and other such work which actually forms the basics of personal finance, is taken care by her. Even after the demise of the male breadwinner, the final decisions are taken by the spouse for the asset distribution and many a times for the couple assets. Less awareness will lead to unsound decisions and there will always be a risk of falling into misseling trap.
6. Insecurity Towards Finance
Although women are fund to be good money managers then men, they are also financially insecure when it comes to money matters. They do not like to take large risks and so bigger investing decisions such as equity investments or purchasing a real estate is delegated to their spouses. Even when it comes to investing, they are more concerned about the security of their money and so they do not like disclosing complete information. This behavior at times is risky especially when women are unaware on what decisions are taken by their spouse and they do not have any knowhow of documents related to financial matters. An early demise of their spouse can lead them to suffer.
There will be many other reasons which will demand the need of women taking a larger role in managing their financial life. A financial planning approach helps them in dealing with contingencies and prepare for the later years of life.
How you plan your finances? Do you involve with your spouse in financial decisions?
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