How Women can get on Driver’s seat of their finances?

Women are not just stronger, but also the superior half of our human species. And this has been established time and again. There is no doubt about this.

From my interactions with many of my women clients, I know that they are extremely meticulous and know how to manage things much better than men. And I am sure you will have similar experiences when you think about how well your mother and wife manage things at home. We men just can’t think of matching their achievements. 🙂

But talking of finances, and story changes a bit. Due to society’s ancient notions about what women can do and what they cannot do, and at times due to women’s own choice to keep distance from money matters due to lack of interest. The result is that women often end up not being in control of their finances. And that is not advisable.

It really doesn’t matter whether a lady is single or married, women should take an interest in managing the finances. For themselves as well as for the family.

You all know that I talk a lot about Financial Freedom. And when I talk to female clients of mine, I do hear this term a lot. But many times, it’s more about having the economic freedom and not actually about financial freedom. So for many women, having ‘financial freedom’ can mean an entirely different thing with respect to her life. It’s not about the typical definition of financial freedom, i.e. having enough money to not having to work again. Instead, it’s about having the freedom to earn and manage their own money in the present itself!

I feel it’s very important for the ladies of the house to participate in money matters. Really very important. At times they may not be interested in it and would want their husbands to manage money in its entirety. But this approach should be corrected. Even if they don’t have any interest in these things, women should still try to develop the interest to ensure financial fortification of the family. Women can bring in a completely different perspective in money discussion which men might be missing. And that can be very useful.

Another aspect is that everybody’s financial personality and risk appetite is different. And as a result, many times couples are financially incompatible. This is not a problem if handled in a balanced manner. But this does require some effort from both sides to understand another person’s view. At times, bringing in an outside (investment advisor) may also help to find the common ground.

For many, personal finances can be a source of worry. More so if there are financial problems which can take a huge toll on your mental, physical and overall quality of life. But while worrying about finances won’t solve anything, having a plan to try to manage financial challenges can help ease the burden and stress from the situation.

To be fair, every women’s financial situation is different. Hence, common advice may or may not work in every situation. Nevertheless, here are a few suggestions that women can incorporate in managing their finances as well as to handle the family’s finances:

• Maintain a Monthly Budget – Budgeting can lower the financial stress as when you make a budget, you are more aware of your cashflows and in better control of your money. A budget helps decide when and how you are going to spend money. A good spending plan will cover your immediate expenses. This will also help you put aside extra money towards any other financial obligations. Some might find it hard to manage expenses at the start but eventually doing this will create a good financial habit which is quite beneficial in the long run.
• Rationalizing Expenses – Once the budget is in place, you can assess which expenses are mandatory and which are unnecessary. To improve your finances you need to prioritise your financial obligations and cut down on extravagant spending. The lesser you spend, the more money you can set aside to save and invest for your financial goals. And that is very important. Here is a free financial goal sheet to help you figure out your financial goal (Suggestion: Work through this sheet along with your spouse as most of the financial goals of the family are common).
• Build an Emergency Fund – Most people hope that emergencies won’t happen to them. But hope cannot be a strategy. You need to prepare for not-so-good possibilities as well. What is an emergency fund? Its actually pretty simple and useful buffer to have. The sole purpose of an emergency fund is to cover any unexpected expenses that might occur like a medical emergency or an EMI payment. An emergency fund helps to cover a lot of financial shortcomings. It is generally suggested to have an Emergency Fund of about 6 months worth of expenses. And when you start, building an emergency fund may seem tough at first, especially if you are struggling to manage your monthly basic expenses. But do not worry. Start by putting aside a small amount of your monthly income to build up your emergency fund over a period of time.
• If you plan your finances well, you will always have sufficient money available to you at the right time. But even then, life might throw curveballs at you. So there might come situations where you need additional help. If you do not want to take help from family, etc., then there is always the option of taking a personal loan at various banks and financial institutions. Tin fact, many of the lending institutions offer personal loans for women at attractive interest rates. But remember one thing. Only opt for a loan as a last resort as the main goal here is to improve your finances, get back in control. And not adding more to your debt burden is a key aspect of it.
• Track Your Progress – You cannot improve unless you begin tracking. So Tracking your progress when managing your finances is very important. Keeping an eye on your progress can make a huge difference in the amount of stress you feel each day. It’s best to find positive aspects of your financial situation by tracking your progress toward your financial goals. Also, try to focus on making the most of the income you do have by spending wisely. Examine your spending patterns to see why and where you tend to overspend. You may need to change your budget and spending behaviour by disciplining yourself.

Let’s touch upon a delicate aspect as well.

Many women give up on (managing) their finances after marriage. Some times out of choice. Other times (sadly) due to family pressures. But this shouldn’t be the case. And both men and women need to realize this. Marriage does not mean losing financial independence. After marriage, managing money should actually be a team effort.

If only one person controls the financial decision-making of the family, it can shake a woman’s confidence about being able to contribute to the family’s financial decisions. More importantly, it increases dependency and that is not advisable from risk management aspect as well.

It is strongly advised that both men and women participate in handling family finances. If it requires some effort and increasing knowledge then that should be addressed at the earliest.

When it comes to handling personal finances, it is always advisable to have a Goal-based Financial Plan. Investing randomly here and there won’t take you anywhere. For couples, they should work together to create financial goals which both agree on. Both short term and long term goals. And when you begin investing for those goals, make sure you regularly review those goal-linked investments and more importantly, talk and discuss goals and investment regularly together. Talking freely about money matters can ease a lot of tension that at times builds up in families. You can also take the assistance of a competent, trustworthy fee-only financial advisor who can discuss and create a solid investment plan for you and your family.