Five reasons women need financial planning more than men

| 09 Mar 2023

Financial planning, money management, and investments have traditionally been male-dominated and male-oriented. Even with women excelling in all fields of life and becoming increasingly independent, their financial planning still takes a backseat.

However, women are born money managers. When armed with the right attributes of being risk-aware, disciplined, making informed decisions, and staying calm under stress, women can go from managing home budgets to smart investors.

Men and women undergo different life experiences which differ in their knowledge and attitude toward risks. More than men, it is women who have a greater need to actively manage their finances.

Here are five key reasons financial planning is critical for women.

 

Financial freedom

To be truly independent, every woman must aim to have financial freedom and become self-sufficient or capable of meeting her financial needs. 

For this, women need to start building their own wealth with a sound investment plan. 

As a rule of thumb, women should start early to reap the benefits early. 

Women have the potential to bring societal changes as they begin to invest back into the community and their children.

 

Career breaks

According to research done by the insurance agency AIG Life, women are nearly three times more likely to have to take time off work to look after children. 

As caregivers in the family, women tend to take more breaks from their careers than men. This could be due to childbirth, taking care of the elderly, or even relocating with their spouse. 

This break would indicate a certain period without an income, which is bound to disrupt regular savings and investments. As such, it is very important for them to plan their finances more carefully.

 

Lesser earnings

It is an unfortunate yet well-documented fact that for the same job, women are paid less than men. 

According to an online source, women earn 82 cents for every $1 man earns when comparing all women to all men. The pay gap increases even more with seniority. 

Naturally, this means lower savings and a lower retirement corpus. There exist situations where women have chosen to take up a job that pays them less so that they have a better work-life balance. 

With lesser income, financial planning becomes very important for women.

 

Longer life expectancy

Women have a longer life expectancy than men. In India, the average male life expectancy is 68.4 years and the female life expectancy is 71.1 years. 

This means that women live longer than men post-retirement and hence need a bigger corpus to survive. Sometimes even working women tend to depend on their husbands to manage money. 

In the event of their husband’s early demise, widows find it difficult to manage their finances. Effective financial planning thus becomes a more important skill for women to have.

 

Life goals

The woman of today is more aspirational and driven. They have many professional as well as personal life goals. It may range from travelling the world to starting their businesses. 

All these goals need to be backed by adequate finances, where investment planning helps. With the right financial plan, women can ensure that they meet their goals in the timeframe needed, without relying on others to back their dreams. 

Financial planning is a bit more important for women so that they know how to handle money and learn how to save, invest and spend it cautiously. 

Women must take charge of their financial well-being and excel in money management, just as they do in other fields.

 

This is an abridged version of an article by Ms Priti Rathi Gupta, Founder & MD of LXME, which appeared on MintGenie.