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Why and how should women become financially literate?

Women have attained equality in many aspects including education, work, income etc.; however, they have often shrugged or struggled from taking centre stage in financial decision making. This has often been attributed to the lack of confidence primarily due to lesser financial knowledge among women. 

As per the survey by National Centre for Financial Education on Financial Literacy and Inclusion in India 2019,

• 27% of respondents were deemed to be financially literate.

• Out of this 29% were male and 21% were female.

(sample size: 75,000 adults)

In India, we have close to 80% literacy but very low Financial Literacy and the women and the lesser educated people are far more likely to suffer due to the lack of financial knowledge. Since women on average tend to live longer than men and have a shorter career and with a gender pay gap, they are more likely to face financial hardships in old age.

The Top #7 Reasons why should women be financially literate

Participate in the family’s financial decisions

According to the DSP Winvestor survey, 33 % women make their own investing decisions. Traditionally, the men of the family take the family’s financial decisions leaving the women behind. With higher financial literacy amongst women, they would be able to participate in the family’s financial decisions and contribute meaningfully. It is very important that women take part in the financial decision making, this will enable them to fend at least financially in the unfortunate event of the eventuality of the bread-winner of the family. Without enough knowledge of what investments and insurance are made, availing of insurance claims and getting a hold of the finances could be a challenge. 

Take care of the family

Budgeting is an important aspect of running one’s household. Women are in charge of this aspect. Being able to budget and spend within their means, they instil very important life skills and values in their children. Responsible spending and saving habits are to be emulated by parents for children to learn and follow. Women who are financially literate will not only be able to budget and spend wisely, they will be able to impart wise money habits to the next generation.

Plan for post-retirement years

It is an established fact that the life expectancy of women is higher than that of men. Thus, reiterating the fact that there is a need to plan for their later years to live a life free from financial woes. Even working women often postpone planning for their retirement requirements. Women who have been engaged in traditional household roles are suddenly required to take up the responsibility of fending for themselves during their later years. 

Evaluate financing options for big-ticket purchases

Whilst making big-ticket purchases such as a house or luxury car, ascertaining the right means to finance such purchases requires an understanding of the options. Many investment options can empower stay at home women (particularly moms) with financial independence. Achieving financial independence provides the much-needed confidence among women to manage finances efficiently. Even ascertaining if the big-ticket purchase falls within your budget is a function of the level of financial knowledge. 

Avoid reckless financial behaviour

It has been often seen that during the initial working years, both men and women spend their income recklessly. They acquire personal loans or credit cards overdue which eventually leads them into a debt trap. This can be quite a tricky and stressful situation to be in. Without adequate knowledge, they continue to fall deeper into these undesired situations. 

It is thus very important that financial awareness is created right from childhood, children after a certain age should be allowed to handle small amounts of money, they should be told how and why it is important to invest prudently. While they are studying the concept of simple interest and compound interest, they should be made aware that this is the golden rule which is applicable for investments as well.   

Invest according to the family’s financial goals

Investment planning can be initiated by ascertaining financial goals, this requires a good understanding of how much would be required and at what period of time. It is also important that one understands the factors which will impact the corpus in the long run. 

Inflation, interest rate, volatility or risk, return are some of the concepts which come into play while one has to start investment planning. It is important to start investing early and stay committed over the long run. Many of the investment avenues require decent understanding and the best way is to read through the offer document or brochure. The fine print will give you insight into the risk-return aspects and help you ascertain the suitability to your needs and goals. 

Transacting digitally

There is a huge transformation in the way transactions are conducted. From cash purchases, the world is moving to a contactless, cashless digitized transaction world. Most of the purchases is being done online and the payments are done either through internet banking or UPI, wallet etc. 

Women who operate in the traditional household roles are now required to use their smartphones to make purchases including grocery, clothing etc., Being aware of these aspects come in handy for women in performing their roles more efficiently. It also helps them stay abreast with the latest developments. 

How can financial literacy among women be improved?

Women uplifting women: 
There are many companies that have women entrepreneurs and intend on uplifting other women by employing them. Such women-centric companies are gaining momentum as they offer a platform for women who have taken a career break due to personal reasons including motherhood. 

Many companies also use their diversity program extensively to bring back women talent into the formal fold of employment like mentoring other women who harbour dreams of entrepreneurship, conducting workshops to create better awareness on how to empower themselves and attain financial freedom. It is upon empowered women to look out for others who require hand-holding. 

Workshops for women to enhance literacy: 
There are multiple workshops conducted for enhancing financial literacy, there is a need to design such workshops keeping the needs of women in mind. Women in traditional roles in a household may require short workshops or demo sessions on how to transact digitally using their cell phone, budget their household expenses, invest the excess funds etc. 

There should be specific awareness required to enable women to understand women-centric initiatives and investment schemes such as Support to Training and Employment Programme for Women (STEP), Sukanya Samriddhi scheme (for girl child). 

Upskilling using online resources: 
The upskilling opportunities are galore given that there are sufficient online platforms from where one can gather enough information. There is a need to systematically look for necessary information and learn the nuances of investing. 

Gaining enough financial knowledge will help gain confidence and help you plan your finances better. You may also avail of the service of a professional financial planner who will provide the required assistance. Enhancing your financial knowledge is pertinent to ensure that you lead a peaceful life without any financial woes.