BackRather a Ms Money, than miss money
As I wrote my book, these were the most common laments I heard from the women I spoke to. Committed career women on the outside, but scratch the surface, and you realise that many never took their money seriously
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I should have put money away for my investments sooner. I don’t know what I am going to do when I retire, I haven’t saved enough."
As I wrote my book, these were the most common laments I heard from the women I spoke to. Committed career women on the outside, but scratch the surface, and you realise that many never took their money seriously. Some were married, and largely became the “second salary" in the house. They never considered themselves breadwinners in the same vein as their husbands.
Those who were single, were largely living at home with their parents. They seemed to have the comfort of inheritance and were able to manage their spends better, but not their savings.
I divide a woman’s working life into three stages: early career (1-5 years), mid-level (5-10 years), and then senior management, because I found typical patterns that change according to age and stage.
In stage 1, women tend to spend on lifestyle. Towards mid-management, many are likely to be on maternity breaks. They are likely to have invested in a house and are contributing towards an equated monthly instalment (EMI). Women in senior management have started investing, but perhaps still paying EMIs towards home loans, maybe education loans for children and elder care too. They typically do not save for retirement even in this stage.
This happy picture can suddenly shatter. A maternity break costs not just current income but also future promotions and career path. Getting laid off, specially when single. Getting a divorce. Sudden death of the primary earner. All these can pull the rug out from under the feet of those who otherwise have perfect lives.
Ramya Pradhan was a senior marketing manager with a consumer brand in India. Her annual salary hovered around 32 lakh and her husband was the chief executive officer of a large information technology company. She had taken two maternity breaks, and the second extended to a couple of years due to her child’s severe respiratory issues. Her daughter (now grown) was studying abroad and her son was due to go in a year. And then, her marriage fell apart. The children chose to stay with their father as he had the bucks to support not only their lifestyle, but also their college fees. She was left with close to nothing in terms of her savings and had to make dramatic changes in her lifestyle as a result. Today, she wishes she had the tough money conversations on investments and assets with her spouse when the going was good.
My learning from writing this book is that women need to have a money plan. Start with learning to negotiate. Women come up short when negotiating for a better salary or an investment into their company. It is a learned skill.
Keep your credit card spends under check. Only spend what you know you can pay off at the end of the month. If you can’t resist, cut up those cards.
Starting from your very first job, target a saving of 20% of your income each month—this is over and above your forced provident fund saving. Convert bank deposits into investments. Women tend to keep money in the bank and not invest. Get medical and life covers in place. Speak to a financial planner if you don’t know how to do this.
Importantly, if you stand to inherit property or money, don’t be a fly on the wall in your family discussions. Ensure that the majority of the family property does not go to your male siblings. You have an equal right and should insist on it.
For married women, it is essential to have your independent bank account. Don’t handover your money blindly to your spouse or mother-in-law, or put into a joint account. If a family asset is being acquired, it should be in a joint name. Often, women hand over this to the spouse in a “romantic" whirlwind of affairs. Don’t. Women tend to spend on household expenses, and men build assets. At the time of divorce, the law states that the asset belongs to the one who paid.
If you are on a break (maternity, transitions) and not earning, reach an understanding with your spouse where he contributes a percentage to your now stagnant bank account. If he is on a break, (paternity, transition) do the same for him.
Take charge of your money. Honest confession: I’m terrible at it. But after hearing heart-breaking stories, I have become more cognizant of my follies. I will stop shopping indiscriminately, and the savings plan comes next. All in 2016.
Aparna Jain is Integral Master Coach, and author, Own it: Leadership Lessons from Women Who Do (HarperCollins India).
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