8 Reasons Why Financial Planning is More Important for Women than Men?

By CFP Poonam Rungta

“Men are from Mars and Women are from Venus” American author John Gray very successfully told us that men and women are two different creature altogether. There is no comparison between men and women, not only in terms of relationship, viewpoint, thought process, but this is true when it comes to money matters as well. From financial planning to risk appetite from financial goals to earning pattern, men and women are very different.

A WHO statistic tells us that women are living longer. With a longer life expectancy, women outlive men by 6-8 years. They encounter different health issues, different psychology, different needs and wants. So if men and women are so different, then their financial planning should also be different from each other.

Let’s list these differences broadly to understand why financial planning is more critical for women than men.

1. A study by the Center for Women Retirement Research suggests that women spend 15% of their working years outside the workforce due to various reason. In the life cycle of working women, there are instances where they have to prioritize family and take a break from careers e.g. maternity, bringing up children, medical emergencies at home, children exams etc. This makes their need for emergency funds to be more than men. The second reason why an emergency fund becomes important is the gender pay gap. Women get paid less for the same skill and experience than men. This makes it mandatory for women to save more than man.

2. Longer life span. Typically in India, women are always younger than their husbands and outlive them. Hence they should have a retirement plan for a longer-term.

3. Lower risk appetite is observed in women investors. Which I understand is because they are ones who play an active role in budgeting and saving. The efforts taken by them to save makes them risk-averse.

4. Some of the Health issues of women are unique, like pregnancy-related issues, breast/uterus cancer etc. for which they need to buy such medical insurance which covers all. Usually waiting period of such instances is 3-4 years.

5. Many daughters if happen to be a single child, take care of their parents as well. To meet this responsibility, a woman must plan their funds.

6. Love for precious metals is evident in women. The possession of gold, silver, diamonds etc. gives them a sense of security. Their portfolio always has this shiny asset. India is a country of festivals, lavish marriages, and extensive celebrations of childbirth, mundan, and other such occasions which are typically marked with gold and silver. Hence, women plan to possess gold naturally. But, this is not for investment, its for consumption. Its important women start accumulating gold in electronic form too. Like gold ETF and gold, bonds can be a welcome change in the way they hold gold.

7. In the modern world, instances of divorce and single mother prevalence cannot be overlooked. If a woman has to go through these circumstances, then along with other mentioned reasons, financial planning becomes even more critical.

8. Women do not pay enough attention to their risk planning, ie life insurance. Working women contributes equally to the household expenses, and hence their risk planning also should be appropriate. Do not ignore a term life insurance plan and ensure that you have a cover.

 It cannot be denied that women are multitasker. In this Corona situation also, she is juggling efficiently with work from home, online classes of kids, managing household without house help and yet manages to smile and look beautiful at all times. A woman is a natural saver and planner. In case of any financial difficulty of family, she comes to rescue in an almost miraculous way. She has been doing a SIP of gold in the family unknowingly, buy buying the metal on occasions like Diwali, Dussehra, birthdays and Anniversary. She earns less than male counterpart but saves more. Despite that, she doesn’t take an active part in financial planning.

It is essential for her financial inclusion if family goals are to be met in an effective manner.

Eight hands of Goddess Durga depicts eight different roles a women plays in her life, to nurture and maintain a family. Ninth hand of financial inclusion should also be added to complete her Profile. Women empowerment can bring considerable changes in the family’s financial goal achievement.