Dear Sister, Take Control Over Your Finances

Sept. 28 By Meenakshi Nawani

Let me start this piece on a positive note: statistics suggest that more and more women are focusing on financial independence and becoming the primary breadwinners for their families. However, the not-so-good news is that a lot of us still tend to lag behind on important money matters, such as investing and retirement.

So, here’s a little story from my own life: I started working a little before I turned 21. I paid my bills on time. I bargain-shopped like a pro. I was always conscious that I didn’t spend out of my means. So, I was confident that I had my act together when it came to my personal financial management. One fine day, over lunch, I spoke with an older co-worker, who discovered that I had not signed up for the retirement plan offered by our company. He also learnt that I wasn’t making enough investments in order to lower my taxes and maximize my savings potential. He was horrified. Speaking slowly, my good-hearted colleague explained the significance of contributing towards the plan and also tried impressing me with numbers. I was bemused. Just to get him to stop talking, I halfheartedly promised to look at the paperwork. I dallied and kept putting off enrolling before finally keeping my word after four years! It wasn’t until I joined a reputed investment management company that I understood how important saving and investing was! And more than lack of knowledge, I believe it was a psychological hurdle I couldn’t get over.

I realized that I was a part of the phenomenon that economists call “the female financial paradox.” To put it simply: like millions of other women, I was in perfect euphoria to save a few pennies and hunt down sales, yet I couldn’t gather the slightest interest in building financial security and wealth.

Now, 13 years later, I am pondering over this thought and trying to understand why is this so. It is not like women are meek and passive in their careers. They have more power and earning potential than ever before. They are graduating with more college degrees, and climbing farther up the ranks in nearly every industry. They do very well in day-to-day financial affairs. But they tend to shy away from matters like investing and having a long-term money plan.

I understand that there are some societal norms that continue to follow from the 1940s and 1950s where women were excluded from discussions about finances. However, many women I know(with the exception of those who work in the financial services industry), don’t take enough interest in these topics.  That lack of engagement has a high cost. We need to take charge and realize that in a do-it-yourself retirement system, we have to put money aside each and every month for our future. No one else will do this for us and being self-sufficient financially in our senior years is not only a help to us but also a big help to our loved ones.

While I am still learning myself, here are a few suggestions I would like to share to help us achieve a better control over our finances.

Build more confidence in money matters: Most women radiate competence and authority on a daily basis. They could be brilliant doctors, strong managers or even cool and collected stay-at-home mothers. But when it comes to this one particular subject, not so much. It’s okay if money discussions make us feel nervous or clueless. We need to start talking more and more about finance, may be with our spouse or a trusted friend. Start with simple budgeting for you own home and review your financial statements on a monthly basis. These small steps will help you to know where you stand. 

Augment your financial knowledge: Consider picking up a personal-finance book or visiting a money-information website to school yourself in any concepts that seem tough to understand. It also helps to have an adviser you can depend on, even if you contact them only once a year. Make sure your money professional speaks transparently and simply, without excessive use of jargon or acronyms, and that you feel completely comfortable talking to them.

Focus on the bigger picture: Traditionally, being smart with money meant knowing how to stretch the family dollar. Things haven’t changed much since then. While there’s certainly nothing wrong with getting your money’s worth, experts say that women need to move beyond worrying about nickels and dimes and start thinking big.

Participate and contribute towards financial goals: It’s important to save; we know that by now. It is also very crucial to think specifically about what you would do with that pot of money. Make detailed financial goals in order to ensure that that you’ll follow through with what’s necessary to achieve them. It could be anything ranging from sending the children to a good college to settling in a place of your choice after retiring. It will help us to become less anxious and more proactive.

I understand that the thought of becoming financially savvy scares most women. Sometimes getting scared is fun (It’s almost Halloween time!) and sometimes it can be motivating. Staring it down and taking action can be the best and most empowering experience of all! It’s not only about crunching numbers, it’s about getting the life you want. So, go for it!