Let’s start with an unpopular opinion – Women need MORE financial security than men
Hold on…it is not about women being weaker and therefore need more security, it is about facts like
- Females have a higher life expectancy than males, which means they have longer retirement years
- Gender pay inequality unfortunately still exists and therefore women have less overall savings, less pension and associated benefits.
- Typically the work tenure for women is also on average lower than men. This could be due to different reasons – starting late, taking breaks due to family and so on.
So here is the irony – Women need more financial security for their retirement years but they are not actively involved in long term decisions which can impact their financial independence and stability.
In a recent survey conducted by MYRE Capital to understand the investment behaviour and financial decision pattern of over 5,200 women across Tier I and Tier II cities, it was revealed that only 27% of women who invest make their own financial decisions.
So the big ‘elephant in the room’ question is – Why are women not included in financial discussions and decisions?
Well, in my view it could be …
1. Low financial literacy – Unfortunately, this is true – studies have shown that there is a considerable gap between financial acumen of men and women. But there are 2 issues related to this which makes matters worse.
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- Firstly, it is just assumed in most cases that they will not understand or simply not interested so there is not even an attempt to engage them in such discussions. This has been my personal experience too. Whenever my husband and I sit with a financial expert to discuss an investment option or with a real estate agent to talk about property matters, their complete focus and effort is to convince my partner … and I am conveniently ignored! Only when I ask some legit questions or my partner supportively involvme, they get the message and then their attitude changes.
- Second issue is that it becomes a vicious circle – how are women expected to improve their knowledge about financial matters if they are not even involved?
2. ‘Higher Income earner is the main decision maker’ – Though things are changing but on average, men earn more than women in a family … even if they are at the same role and experience level, the gender pay inequality makes sure that men remain higher income earners. Now comes the assumption part – whoever is earning more has the right to make financial decisions. Maybe that is how it should be … but remember, it is not about who is making the final decision. It is about being involved in the process.
3. Division of responsibilities – In case of couples, household responsibilities are divided to make sure that not one person is overburdened. Here too, men get the role of managing finances like doing bank work, paying bills, filing taxes etc. This is one of the reasons that single women rank higher in financial literacy than married women, as married women tend to delegate their financial responsibilities to men.
4. Financial instruments are becoming complex – Gone are the days when a ‘major financial decision’ was which bank to consider for savings based on how much interest they pay. Now, even taking a home loan is an education in itself as you can customize and personalize the terms and conditions to your situation. In general, there are more financial options now and they are becoming complex with structured notes and AI created complex financial instruments. This circles back to the first point – given their low financial awareness and interest, how will women understand these complex parameters?
5. Women are not helping themselves – The assumption that women will not understand or is simply not interested, does not come only from partner, family member or financial experts ..but from women themselves. While they are perfectly fine in managing day to day or short-term finances, they tend to stay away from long term investment and financial planning. It could be that they do not understand the importance and impact of financial decisions on their later years or just rely on others to make the best decision for them. Also, why is it assumed that men are happy managing financial matters and making long term investment decisions? Believe me, they are not. They are also looking for support when they come across difficult situations.
6. Social and cultural factors – Social norms and gender stereotypes also contribute to low participation of women in personal finances. These stem from women’s traditional role of being homemakers while men being responsible for providing financial security. In some societies, even for single women who are the sole-earners, other family members or financial experts tend to decide on their behalf on what is financially right for them and what is not.
7. Discussing money can lead to friction – Money is often considered a sensitive topic (yes it is and that is why this blog!) and therefore not discussed among couples or in families unless there is an absolute need to. They don’t approach their partners or parents or other family members with the fear that financial disagreements could potentially lead to friction in their relationships. Again, the purpose of discussing financial matters is not to take control but to be aligned on financial goals and plans.
8. Perception that a man’s financial ability is under threat – and of course, lastly, men are also not being helpful in sharing this responsibility. When a woman/spouse approaches a man with a question about some financial decision or matter, they tend to take it personally. They feel that their money management capabilities are being questioned and either ignore the discussion or just provide some superficial answers without going into details.
