According to a survey conducted by the National Centre for Financial Education (NCFE) in 2020-21, only 21% of Indian women are financially literate. This statistic is particularly concerning for a nation aspiring to reach developed status in the coming decades. Financial awareness among women enhances not only their personal well-being but also provides valuable support to their families and boosts the country’s economy. Therefore, it is essential for women to strengthen their financial skills and challenge the societal norms and gender stereotypes that inhibit their financial advancement and security.
Many women hesitate to negotiate their salaries or invest in financial markets due to a lack of confidence or understanding of their financial rights in marriages, such as property inheritance. Despite their ability to earn well, they often assume passive financial roles. In addition, some women exhibit a lack of interest in managing finances or do so ineffectively. However, achieving financial security is as crucial for women as it is for men. Their roles extend beyond caregiving; they are co-earners and should take on the role of decision-makers. Studies have shown that women have equal capabilities to men in managing finances, so why do they shy away from assuming financial control?
Shilpa Bhaskar Gole, Founder of Nerdybird Financial Wellness, notes, “From childhood, society instills the belief that men handle finances while women take on caregiving roles. Such ideologies not only hinder women’s financial management but also shape their confidence, decision-making abilities, and long-term financial security.”
Mrin Agarwal, Director of Finsafe, explains, “Women sometimes become indecisive due to inadequate information and often do not prioritize gaining knowledge because they are already juggling multiple responsibilities.” This can lead to financial vulnerability, dependency on others, and lack of preparation for uncertainties. As a result of this knowledge gap, many women remain attached to ‘safe’ investments like fixed deposits, which do not beat inflation and offer low returns, as revealed by a study conducted by DBS Bank India and Crisil. An alarming 51% of women prefer fixed deposits, indicating a significant gap in financial understanding that hinders their quest for true financial independence.
AVOIDING STOCK MARKET INVESTMENT
While some women refrain from investing in the stock market due to a lack of understanding, others are simply risk-averse. Take Yashasvi Shailly, the 32-year-old Chief of Staff at a marketing agency in Gurugram, for example. Despite being knowledgeable about markets, she allocates 60% of her funds to fixed deposits, considering them the safest option. However, her investment strategy could yield much higher returns through equities. “Understanding the risk-return trade-off is crucial for long-term wealth creation,” advises Harsh Ghalaut, Co-founder and CEO of FinEdge.
Contrastingly, Zainab Khan from Delhi began her investment journey at just 15 with her mother’s account. “I invested most of my pocket money, driven by curiosity about the stock market,” she recalls. This early start helped fund her education. Now, at 23, she dedicates a significant portion of her income to equity mutual funds, ensuring at least Rs. 15,000 monthly in equities and Rs. 3,000 in gold ETFs. “Although I don’t have immediate large goals, I know my persistence will yield results,” she shares.
A mindset similar to Khan’s is vital for pursuing larger financial objectives, as relying on fixed deposits or saving schemes alone won’t suffice. While fixed deposits may provide a 7-8% return, the post-tax result for those in the 30% tax bracket can drop to about 5%, especially when considering inflation rates of around 7%. Investing in equities could potentially offer 10-12% post-tax returns.
FAILURE TO NEGOTIATE SALARY
Many women accept salaries that do not reflect their skills or experiences, often stemming from struggles with self-worth. “Women may feel they don’t deserve higher salaries, hesitate to negotiate, or prioritize job security over financial compensation,” Gole highlights. Zainab Khan reflects on her past experiences, acknowledging that she accepted lower pay due to her perception of worth, whereas some male colleagues earned more because they negotiated effectively.
Salary negotiations reflect not only earnings but also self-worth. Researching industry standards, documenting achievements, and confidently requesting equitable compensation are strategies that can shift this trend towards equality.
Consider Huma Khalid, 28, who faced challenges upon re-entering the workforce after a year of illness. Despite holding an MBA, she was offered low-paying jobs due to a perceived lack of managerial experience. However, Huma remained steadfast in her belief. “I never settled for less than I deserved and continued searching until I found the right position. If women stop accepting lower pay, employers will eventually stop offering it,” she asserts.
OVERLOOKING FINANCIAL RED FLAGS IN RELATIONSHIPS
While women’s financial empowerment is progressing, many still overlook troubling financial behaviors in their partners. Familiarity with a partner’s financial habits can prevent conflicts and misunderstandings later on.
Abhilasha Bannerjee, at 37, found herself supporting her husband financially when he left his job to chase his passion. When that venture did not succeed, he turned to her for financial assistance, which has persisted for over a year. “His family has also started seeking financial help from me,” she admits. Abhilasha struggles to voice her needs and hold her husband accountable in financial matters.
Many women, like Abhilasha, face financial abuse bolstered by deep-seated patriarchal structures. Fear of potential conflict or divorce may prevent them from initiating tough conversations about finances. Achieving financial independence allows for better decision-making, reinforcing the necessity for vigilance and assertiveness.
IGNORANCE ABOUT INHERITANCE RIGHTS
Despite robust succession laws designed to protect women’s rights, many remain uninformed about their rights to property and assets. Zainab Khan, a 23-year-old tech support specialist, understands this importance and is aware of her succession rights, while Shilpa Shailly feels her lack of siblings minimizes her need to know her rights.
Rajat Dutta, Founder of Inheritance Needs Services, points out that female professionals in various sectors, even in major cities, often lack awareness about inheritance laws. These gaps can render them vulnerable, particularly when pressured by family to relinquish claims on property.
Many assume fair handling of inheritance matters within families, leading to future complications. Thus, women need to be proactive about understanding the basic inheritance laws to avoid financial losses and protect their interests. “Women should participate actively in estate planning discussions, ensuring proper documentation and seeking professional guidance,” Dutta advises.
DEPENDENCY IN FINANCIAL MANAGEMENT
Many women rely on male partners or friends for financial decisions, a dependence that can prove detrimental if relationships falter. Mily Chakraborty from Lucknow understands the need to invest but lacks the confidence to conduct research, relying on a friend for advice. However, allocating even a short amount of time to understand investment choices could greatly benefit her.
Conversely, Yashasvi Shailly conducts her own research before making investment decisions. The trend of relying on others for financial management is prevalent, especially among women, who often hesitate to engage with financial topics independently.
While this issue affects individuals regardless of gender, it is pronounced among women due to societal pressures. The lack of financial knowledge can lead to serious complications, deterring women from managing their finances effectively and leaving them exposed to potential exploitation.
