This article has been written by P V Subramanyam, a chartered accountant and financial trainer.
Women need to plan for their retirement more than men need to - because they work for a lesser period and live longer. Longevity is not always a boon - the woman who lives longer will have to fend for a longer period.
Also with family dynamics changing and women having fewer children, it is not uncommon to see a widow living all alone - as her child has pre-deceased or is living abroad. Not sure how many of you remember S D Burman, Bollywood’s famous music director. His wife outlived her son R D Burman by 15 years.
What this means is that a woman should have MORE money, and better money management skills than men.
While this is the requirement, reality is quite different. There are some serious limitations / obstacles for women to create a bigger corpus. Let us look at some of them.
Academically women do better, but even in communities where education is important girls are rarely encouraged to study to their full potential.
Do not get me wrong.
They may go and get an MBBS, but then MS, MD or McH looks difficult because it takes too much time. 'How can we find a boy more educated in our community?' is a question they will grapple with. Sad, but true. As a result, only exceptionally brilliant girls are allowed to pursue studies beyond their post graduation. Even so, in many cases it is more of a ‘marriage qualification’ and not really a ‘job getting’ qualification.
- As a corollary of studying less, they earn less.
If you assume that an average commerce graduate earns less than an average chartered accountant, apply that logic across and you will know why women earn less.
They also have serious geographic restrictions. A young lady from Indore may not be allowed to travel to Ujjain, though it is such a short distance, to take up a full time job in an unknown city.
- Women do not take themselves seriously.
Despite many working, they hold this nonsensical misconception that cooking is their job and finance is the man’s job. 'My father /husband/handles my money’ is an oft heard statement.
With this sort of mindset, they tend to be very gullible. I see relationship managers in banks regularly get women to buy the worst, and most expensive insurance products. Whether it is a woman earning Rs 4 lakh and investing Rs 10,000 per month, or a woman earning Rs 45 lakh and investing Rs 1 lakh per month, it is the same. A worse scenario is when they hand over money management to their husband without ever checking the latter’s competence to handle big sums of money.
Women also hold the view that since they are not the primary provider, their spouses should handle the finances.
Ridiculous!
Most men cannot think beyond current consumption. It is women who think about the larger and longer implication of things. I know many men would like their wives to get more involved, but the latter stay away. This mentality must change. Happily it is - but too slowly.
Whether it is for child bearing, child rearing or nursing an ailing relative, it is the woman who takes the break in her career. This again upsets her growth path and therefore the earning cash flows are reduced.
Women in the U.S. work about 12 years less than their male counterparts. In India the gap could be greater.
Granted, we have seen the likes of Chanda Kochhar (ICICI Bank), Shikha Sharma (Axis Bank), Arundhati Bhattacharya (SBI), Sangita Singh (Wipro) and Chitra Ramkrishna (NSE), but let’s face it – they are more the exception than the rule.
In closing, I would like to advice all women to be aware of the fact that they could be single at some stage during their adult life– unmarried, divorced, widowed, childless, or married but with the spouse incapacitated. Risk is when you are not prepared for such an eventuality.
