All of us, particularly Indians are familiar with the scenario where the females in the house hand over their monthly income to their fathers, husbands, or brothers just because of the assumption that they don’t know what to do with it or how to manage it. But there’s something at least today’s women/ girls should understand. The quality of our lives is way better when compared to how it was during our grandmother’s or great grandmother’s time. Be it at any point in our lives, one thing we women should keep in mind is the importance of being financially literate and independent so that we can also become adept at managing our finance, without depending on the males in the house.
Financial Independence can be defined as the ability to earn one’s living or making good decisions with the money one has. In today’s scenario, it is equally important for men and women to be financially independent. And when it comes to the Indian scenario, I would emphasize that women have to be more independent, owing to the male-dominated society we live in. Moreover, it is observed that women outlive men in many cases, forcing them to lead their retired life alone.
Let us now look at why financial independence is a must for women.
i. To prevent emergencies: In today’s world, particularly after the onset of covid-19, it has become extremely important for us to be prepared for emergencies. Layoff rates have gone up and akin to our lives, jobs have also become insecure. During earlier days when the husband was the sole breadwinner with a dependent wife and children, there was absolutely no reason to worry. But in times like that of the post covid era, when many are forcefully leaving their jobs panic starts creeping in leaving the family disturbed till he lands in another job. In such circumstances, a financially independent woman can make the ends meet or even save the day.
ii. To meet the rising cost of living: As we all know inflation has gone up over the last few decades. Meeting even our basic needs like owning a house, paying for the kids’ education, living an above-average life, etc. has become uneconomical. In such situations households with a dual-income fair better. Financially independent women apart from sharing the household expenses can also help meet the family’s financial goals.
iii. To feel responsible and boost morale: Financially independent people are generally independent and have good decision-making skills. This helps them boost their self-esteem and makes them resilient and mentally strong. In India, we can see women belonging to conservative backgrounds becoming dependent on their parents/ spouses for fulfilling their needs, despite having dreams. Financial independence can help women fulfill their wishes, upskill themselves, travel on their own or with their friends to their dream location, make purchases on their own, etc., eventually boosting their morale.
iv. Enables us to be a role model for many: If you are a woman who is a strong pillar of financial and emotional support for your family, then should you be proud of yourselves-You are a real inspiration for many young aspiring women. It helps us gain enough confidence to educate/ enlighten many girls/ women including our children that gender bias is fabricated by society and is insignificant as far as one’s caliber is concerned. As children, we all learned by imitating. Financially independent women are perfect role models for their kids, for it helps them grow up as self-sufficient women who understand the value of money.
What according to you are some of how women can be financially independent? Here’s my take on it.
i. Have a financial plan: A woman must either be a part of a plan or create it. Single women must have a master plan to provide themselves a sense of direction on managing their finances. Married women (irrespective of whether they earn or not) should equally be involved in the process of financial planning. Women are known for their ability to bring in discipline and focus in their family’s financial plan. So make sure that you are always involved in the process of creating a financial plan.
ii. Switch to savings budget: While the ordinary style of budgeting allows us to keep an eye on our expenses, maintaining a savings budget can help us decide how much to save every month, which should ideally be 25- 30% of the family income.
iii. Prioritize on Financial Security: Emergencies and retirements are two crucial situations where one’s financial stability shall be at stake. A simple act of saving a small percentage of one’s income will be all you’ll need to save your day and help you stay independent.
Let us now take a deeper look into a formula all of us, particularly women should follow to become financially independent.
i. Create a budget
ii. Save a specific percentage of your income annually
iii. Create an emergency savings account
iv. Ensure that there are proper earnings for the future.
v. Make sure you invest in a manner that meets your goals and risk tolerance.
Moreover, it is not a bad idea to take the support of a Financial Advisor, to simplify the process. Those in the profession of providing such services shall take the time to understand one’s requirements and come up with a plan to achieve those goals. An ideal advisor shall keep you motivated, invoke your confidence, help you survive the market’s ups and downs, and shape a plan tailor-made to your requirements.
“A woman’s best protection is a little money of her own.”
― Clare Boothe Luce
Idea & Concept: Rajnikanth, AVP, Hedge School of Applied Economics
Content Development: Aswathi Satish, Niyog Consultancy Services Pvt. Ltd.