Money matters for women

Are you one of those women who avoid managing money or taking financial decisions, believing that your father, husband or brother will do a better job of it? Think again. Women handle the day-to-day home expenses with ease and are natural savers. Often, it is the lack of confidence that leads to them entrusting their money to the men in their lives. But there are enough and more examples to prove that women can be as good as, if not better than men at managing money.

Chennai-based Akila K Srinivasan (36) works as a tech lead for Royal Bank of Scotland. She realised the importance of financial planning when she saved money and paid for her own marriage. Now Srinivasan handles both her and her husband's finances.

Even though her parents were aware of the benefits of saving money, due to lack of a financial plan they could not save money for their kids' education. This forced her to think about financial planning. "I combine both our salaries and set aside funds for different expenses," she said. The couple's total monthly income comes to around Rs 1.5 lakh.

Srinivsan started saving money from 2002, when she started working. Back then she would invest Rs 200 in a recurring deposit. RD was the only investment tool she knew. It was only after she joined an IT company in 2007 that she started to earn and save more.

"From 2007, I started investing in equity mutual funds, Public Provident Fund, fixed deposits," she said. Her "biggest mistake" in her early days as an investor, was putting money in a life insurance policy. She bought an insurance cover as she was looking for a tax saving instrument.

Even then she did not follow her friends' investing advice. "Many of my friends used to invest in chit funds, which give an annual return of 6%. But you can get the same by investing in an FD."

Instead of chit funds, she invested money in MFs. Today her investment kitty includes four or five MFs, PPF and some other small investments. She has also taken term insurance for both herself and her husband. She also has a family floater health insurance plan and a corporate provided health insurance cover. "Every month, I invest Rs 50,000 in MFs," she said.

It is not necessary for women to earn first and then think about putting in place a financial plan. Renoo Kirpalani (51) is a commerce graduate and a housewife. She is not a working woman, but still she takes care of her family's investments, in addition to handling the day-to-day expenses. Kripalani started to take interest in her husband's finances five years back. When asked why she started to handle her husband's finances, she said, "I am good at numbers and can prioritise things according to their importance."

Kripalani's husband earns over Rs 2 lakh a month, which he hands over to her to manage. The first thing she when she gets the money is to keep aside a sum for her monthly household budget. Then she takes out an amount for future uses such as saving for retirement corpus or earmarking money for investments like MFs. This, according to Kripalani, are the two most important tasks any financial managers must fulfill. After this one can think of other expenses like buying a car or going on a holiday. Kripalani invests Rs 50,000 every month in MFs. Today she has four MFs in her portfolio.

Why women should be involved in financial planning

In many families, finance continues to be the male member's sole responsibility. But in case of the husband's premature death, the housewife will be forced to handle the burden of the household finances. Also, the trend of a husband as the sole decision maker is slowly fading.

That is why wives should also participate in the personal financial discussions in the family. "In most cases, the wife is not aware of her husband's investments. And after his death she finds herself in a catch 22," said Melvin Joseph, founder of Finvin Financial Planners.

As women don't get involved in financial decision making, often they don't know about their husbands' investments. "One indication of this is the large amounts of insurance money and bank fixed deposits remain unclaimed," Joseph pointed out.

A women who is well-versed in personal finance, can guide her children better on how to manage their finances. A financially-educated women will have a be able to check what the husband is doing with the family income, where it is being spent, which expenses can be cut down, etc.

She will also insist on sufficient life insurance for her husband, which can come handy in case of his untimely death. Also, as women are taking up jobs, it is essential for them to be aware of how to save and invest their own money.

According to Suresh Sadagopan, founder of Ladder7 Financial Advisories, even if a lady is not earning money, she has stake in the well being of her family. "Women are mostly not interested in the nitty-gritty of investments and financial planning. But they should still take part in discussions about their finances," he said.

Start small

If you are a homemaker or a working woman and want to start investing, start now. You can learn about investing and financial jargons through websites or you could also talk to a financial planner who can guide you through your investment journey. You could start with simple investment products like FDs. They give returns in the range of 4 - 7%. For opening, an FD contact your bank and put in a request. You can do it online too, using internet or mobile banking. Then you can switch over to Systematic Investment Plans (SIPs). This is the most most convenient way to invest money in equity MFs. You could also invest in Equity Linked Savings Schemes, as these give tax benefits. You can start by investing as little as Rs 500 every month in MFs using SIPs.

According to Nisreen Mamaji, CEO, MoneyWorks Financial Advisors, working women should start with ELSS, as these combine tax saving with retirement planning. The next step can be investing in large-cap equity funds, which are good for risk averse investors. "Mature women investors with long time frame may invest in mid-cap or multi-cap funds," she added.