The Indian woman is quite possibly among the best money managers in the world. Whether you look at the smallest household in a remote village or an ultra-modern family living in the city, the Indian woman has always adopted and followed various methods of saving to cater to her family’s needs over generations. From the money that is handed to a housewife to manage the household expenses, small portions are cleverly set aside, irrespective of the woman’s knowledge, education or literacy. She is capable of saving money for a contingency or for a need without anyone teaching her the same; she just learns it instinctively. However, with changing times, despite our cultural reverence for saving, modern Indian women are becoming increasingly prone to financial mistakes. Here are the 10 most common ones women commit when it comes to money. These, most often, work in tandem with each other.
1) Leaving all the planning to the man
- In most Indian families, money management is still very male dominated. Generally, two scenarios prevail; one where either the man doesn’t want the woman to know everything or the other where the man is more than willing to teach but the woman is unwilling to learn and understand. This could be because paying bills, tracking the payments, checking from where money needs to be received and how much, doing online payments, dropping off cheques, depositing cheques/cash in the bank, withdrawing cash from the bank/ATM, maintaining records all this sounds boring and tedious. But they also might not have the time to dedicate to these jobs because of their work at home.
- There is also the aspect of shame. Can you imagine doing all this yourself if you were alone and there was no one to help you do it? How dumb would you sound if you asked someone – at a “not- so-appropriate point in life” – how do I make a credit card payment, or how do I pay my electricity bill online? But this doesn’t matter. Even if you don’t need to do this yourself, you need to be aware of how to do daily transactions. Don’t leave this for tomorrow; understanding banking transactions, making payments physically or online, knowing who owes you how much and how much your family owes someone is important. All this information must be known by both, the man and the woman in the house.
2) Not understanding math
- Most women are reluctant to understand or retool their understanding of basic math. Handling basic money transactions such as buying vegetables and paying parlour bills is a breeze but when it comes to paying home loan EMIs or taxes, women get scared of seeing complicated figures and refuse to broach the topic and understand it, even though it might not be too difficult to understand.
- Why does this happen? All you need to do is be patient and understand the workings and the calculations. In the Internet era, things are going to speed up in terms of money transactions and one needs to be able to do math to understand how much he/she is paying for a product or service to avoid being duped by anyone. Don’t shy away from refreshing your math skills or doing your calculations. Slowly, with practice, you will get faster but if you avoid doing this, things will progressively get worse.
3) Always on the look-out for deals, especially free deals – decision making starts at the price
- When you go to buy your vegetables, you check them, bargain and go for the best value for money. Why is it that when someone offers you an “ek pe ek” free deal, you lose your sanity and assume this is the best deal by default? Is it simply because it “seems’ like a better offer? Getting the cheapest is not necessarily the wisest thing to do. You can get conned into very big scams; of buying expensive jewellery, a house, expensive insurance policies or white goods, if you get taken in by bargain deals. Focusing on smaller things and not looking at the big picture is not always a smart thing to do.
- ‘Special deals’ are the reason why most women are taken for a ride. For us, everything seems to begin with the price and not with what is the quality of the product. Therefore, men score over us when they can walk into a store and pick the one thing they like the best at the first glance. Women keep pondering about the price and the product’s worth. Why should price be the focus when you are clear about what you need? Very often you buy things you don’t need just because there is a deal going on and then later you wonder what you are thinking of while making the purchase. It’s like the salesman knew your weak point about looking out for a bargain and conned you with a hair dryer when you are actually bald!!
4) Inertia, maintaining status quo – not taking out time
- As an extension to not wanting to do anything with money management, staying put and postponing things that you have to learn to do is a big issue with women. This is never at the top of the priority list or it’s always last on the list of things to be done. It doesn’t feel exciting or easy enough to do so you keep pushing it for later and so it never gets done.
5) Not enhancing one’s financial knowledge
- Usually Indians learn the basics about money from their parents. Today’s younger generation need more training on money since we are in a world that’s way ahead in terms of business, economy and competition. One needs to be aware of various concepts of money to be financially smart today. This could be through reading, watching some good TV shows or taking help from a certified financial coach.
6) To think you know everything
- Today’s women who are well educated i.e. are either CAs or MBAs or are well-placed in good jobs or run their own businesses – think they know it all. I have come across many women who are unwilling to listen to others and understand what costly mistakes they are making with money, large portions of which belong to their respective families. They feel they know it all and they don’t need to listen to professionals in the business of managing money to consider their options.
- Professional, seemingly savvy women and the rest who don’t claim to know much, are equally vulnerable to acting on tips, wrong advice from all and sundry – right from your friendly neighbour to your broker to your insurance agent. This could lead to a huge hole in your pocket. It’s always wise to hire a good professional financial coach and get good unbiased advice.
7) Making an expense budget but not a savings budget
- We have been taught how to write down our expenses and keep a watch on the same month to month. The idea behind this is to know if you are over-shooting your expenses in a particular month, when compared to the rest of the year; so you may save some money in a month and you may fall short the next month.
- A better way to manage your budget is to decide how much you wish to save from your monthly income. Fix a percentage of the same. For example, if you get Rs. 10,000 per month, you decide to save 25% every month. So, you save Rs. 2,500 and spend only Rs. 7,500 per month. You need to figure how much is the percentage you wish to and can comfortably save every month for the future. This automatically curbs additional expenses and also helps you save for emergencies and other specific needs for the future. The best way to do this is through SIPs i.e. Systematic Investment Plans where the money gets automatically debited from your bank account at the beginning of the month as soon as you receive it.
8) Rather spend than save for the future – live for today
- This is a common feature of the younger ‘moneyed’ generation. Women who earn well are living well for just today and do not care about tomorrow. They would rather have all the latest gizmos, gadgets and consumables than derive value out of their acquisition till it gets a little old. Envying the neighbour and getting the latest before she gets it has become a fad. This only burns a deeper hole in your pocket and prohibits you from getting what you really want and have planned for later in life.
9) Someone else will provide for me – why be financially independent?
- To live on one’s own earnings, to provide for one’s needs, is a thing of today. Most women don’t plan at all for tomorrow. They think either their parents or brother or spouse and then their kids would look after them for the rest of their lives. They don’t believe in wanting to contribute to the family corpus that would be needed especially for their old age and health. This is a huge mistake. To follow one’s passion, to do what one really derives happiness and satisfaction from should eventually help you in earning for your needs and dreams of the future.
10) Not being aware of the need to plan finances
- Each and everyone needs to plan for their financial future. You need to list down goals that you wish to achieve in life. For example, I need to buy a car worth Rs. 4 lacs in 2015. Quantify your goals. Write down the year you need it. Then you can start working towards saving for it. Keep on revisiting and revising your goals, tick them off when they are done and you will feel a sense of achievement that is unparalleled because you managed to accomplish the goal with your own hard work and money.