A complete guide for home-makers to become financially independent

History is witness to the disproportionate impact of any crisis on women. In the aftermath of an economic tornado due to Covid-19 pandemic, women were found to be earning even less than before. The Centre for Monitoring Indian Economy (CMIE) revealed in a recent survey that women accounted for 10.7% of the workforce in 2019-20 but suffered a staggering 13.9% of the job losses in April 2020. While men were able to recover most of their lost jobs by November 2020, women accounted for nearly 49% of job losses in the same duration.

It’s safe to say that women have fewer savings and less access to financial protection as compared to their male counterparts. In this context, The Economist noted, “Whereas women in other countries often withdraw from the workforce when burdened with a child, women in India drop out when burdened with a husband.”

Financial planning for home-makers

According to the 2011 Indian census, household work was the main occupation of nearly 160 million women, in sharp contrast to a mere 5.79 million men who state household management to be their primary job. So how can millions of homemaker women, many of whom are victims of the new normal, plan for their financial independence?

“After accomplishing excellent academics and superb career many women come to a grinding halt either after marriage or having a child. They happily become a homemaker which is an unpaid and a thankless job in most Indian households. They usually feel a sense of regret and guilt for not being financially independent,” said Ashima Gandhi, founder at Investoscope Financials LLP, a company run by the twin sisters with an aim to financially empower 10,000 women by 2022.

She suggests, “Firstly, it is important to accept that earning an income is actually not a mandate to take financial decisions. Being a woman, I can guarantee you that you can influence the financial decisions of your family if you decide to take the first step forward. In India, 13% of married women are forced to make an investment decision due to divorce or their husband’s death. Why not make ourselves financially independent by choice?”

Investment in stock markets

Home-makers still prefer to save in a very traditional manner like a savings account, PPFs, gold or simply accumulating cash in their tiny cupboards. They need to begin investing rather than just saving.

“You just need to invest in a good mutual fund with the medium of SIP and benefit from market-linked returns. While ‘saving’ Rs 500o every month will accumulate to Rs 6 lakh in 10 years, SIP will give you Rs 14 lakh approx for investing the same amount on a monthly basis assuming 15% return. What is the type of the mutual fund you are investing in, what is your return expectation and risk involved etc are a few major things you need to see before starting a SIP,” Gandhi explained.

The stock market, with all its technicalities, risk and volatility, has traditionally been considered a male occupation. However, many women are now participating in direct equities and inspiring other women.

Gandhi gave an example of the ‘First Lady of Wall Street’, stockbroker Muriel Siebert who earned her place and respect among the stalwarts of Wall Street and made history in 1967 when she became the first woman to own a seat on the New York Stock Exchange. She felt investors should prioritise saving funds for monthly expenses, debt to cover emergencies and then only should they think of investing in stocks.

“A sound asset allocation is the key to investment in equities. Also, it is very important to study the fundamentals of the companies, assess them and then buy the share. If you are just a beginner you can start with some selective bluechip companies and further diversify. Take professional help if you wish to take more risk but never rely on robotic advice or a friend’s advice to buy stocks,” Gandhi advised.

Why are women hesitant to invest?

But why are women, home-makers in particular, hesitant to invest? The complex socio-cultural web surrounding women has a lot to blame. It discourages them from participating in money discussions or decisions around investing.

A nationwide survey, conducted by IndiaFirst Life Insurance with a sample size of 5,000 low-income women, found that a majority of them (75%) in the age group of 26-41 years preferred to put their money in savings bank accounts. Meanwhile, only 12% opted for life insurance policies. A part of the problem lies in the communication gap between financial advisors and home-maker clients while discussing investment options. As a single parent, a housemaker or someone who’s married and employed, the financial needs and aspirations of women vary greatly.

But is the financial world even thinking of women while structuring or creating investment products? Before we highlight anything about what the finance industry is doing for women, Gandhi feels, there is a need to introspect ourselves first.

Take the first step towards financial independence

“Firstly, it is very important to plan for unforeseen events. A woman should know where all the financial documents of the family are kept by their male counterparts and what insurances and savings they have.
Proper documentation is a must to safeguard your investments. There are several investment options and plans that offer long-term benefits to women investors. However, one must know how and where to invest their hard-earned money,” she said.

One can even invest in sovereign gold bonds against physical gold. There are company deposits, fixed income plans that add to financial security over the years. Equity and debt mutual funds offer great liquidity and accumulate wealth too. It is also essential to protect the health of you and your family members. A sound health insurance policy will take care of your medical expenses, thus keeping your savings intact.

Needless to say, financial freedom is a very important aspect of one’s life. This is because it means much more than the ability to spend as per your choice. With financial freedom comes an equal voice — a voice that can be heard at home, in your community, and in your country. Make sure to make it a priority in life.