Hello everyone.. I am Shambhavi Mehrotra and with me is Tania Kishore Jaleel. In this week's ET Wealth Wisdom podcast, imbibing the spirit and theme of international women's day, we will list out the three big money mistakes women make.
In many Indian households, it is the men who handle the finances and take all the major money decisions. A lot of the times, women are not even included in financial decision-making and discussions that may directly impact them.
You know I blame the society for this.. Social conditioning definitely plays a part here. In our country, women, even those who earn, let male members in the family- be it their father, husband or brother- handle the family's finances.
That is true.. we are actually brought up in a manner that instils this belief that money is the man's responsibility, his domain..
You know, this attitude will only haunt and hurt women in the long run. It is time that women take some sort charge when it comes to money matters of the house.
With today being Women's Day, I think it is an opportune time to take a look at the three big money mistakes women make.
Probably the biggest mistake… Let others handle our money
Apart from the patriarchal legacy, women stay away from money matters because many find it daunting. In fact, a lot of us have a mind block when it comes to money. And instead of learning the ropes, we'd rather let someone else hold them.
Exactly. Did you know that Indian women score second lowest on the financial literacy ranking of G20 countries, according to a report by Global Financial Literacy Excellence Centre.
Sad, miserable statistic. And not being financially aware, obviously is bad news for you and your money. It will wreak havoc with your long term goals like retirement. This becomes all the more problematic for women since we have a longer life expectancy than men, take career breaks due to childcare responsibilities and are paid less.
So, instead of being so blissfully unaware… we should play to our strengths.. women already have a flair for budgeting, thanks to managing household finances. So, build on this and take on the investment responsibilities too. And men, engage your wives and daughters in investment decisions instead of doing it yourselves.
Now, on to mistake number 2: let our emotions get the better of us.
Surveys have found that women are more likely to help someone out financially. Women also give precedence to their children over their own needs. All this is a result of an emotional approach to their list of priorities. However, they should provide for and protect their retirement first and then the kids.
Okay, how many of us are guilty of this… eating and shopping to get over a bad day? Only to end up feeling guiltier about spending so much, just a little while later?
You really don't need to be a rocket scientist to know that emotional spending can derail financial goals quite easily. So, the next time you blow up your bucks on things you don't really need, think of the time when you made a similar purchase and how long the temporary feel-good moment lasted. If it was followed by guilt or stress, it's definitely time for you to seriously examine the impact of emotional decisions on your finances.
Mistake number three is investing in too much gold jewellery.
Warren Buffett has long held that investing in gold is stupid.
He really said that??
He has said that "it's a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that."
As a traditional investment avenue, it does not yield steady returns unlike other financial products such as stocks, mutual funds, fixed deposits, and other fixed income options. Also, buying or even investing in physical gold comes with it its own set of problems like storage, security, and even liquidity. And what you earn solely depends on gold prices, which by the way, are very volatile. Anything that happens in the economy - inflation, GDP numbers, war, political uncertainty or even monsoon- will have a bearing on gold prices, oftentimes resulting in violent ups and downs.
As an investment, too, it isn't that great. Any growth in its value depends entirely on the belief that someone else will pay more for it eventually. Gold is an unproductive asset. Unlike shares or bonds or deposits, money that you invest in it does not contribute to any kind of economic growth.
You know financial planners suggest that if you really do want to invest in gold, it should not form more than 10% of your overall portfolio. Even then you should consider paper gold like ETFs or sovereign gold bonds.. they are more liquid and cost effective compared to physical gold.
So women, don't make these money mistakes.. it is your money too. You have as much say as the men do in how the money is spent and invested.
Yes, hopefully this Women's Day we can promise ourselves that we will take more charge of money matters in the family, make ourselves more aware financially and be more sensible when it comes to money.
On that sagacious note, that will be all from us for this week, do tune in next week for more wealthy wisdom. Happy Women's Day to you all!