Women are on par with men in the 21st century. Women have come a long way from being confined to the role of stay-at-home wives by overcoming patriarchal culture, winning their rights, and eventually rising to the top of organisations and countries.


Many times, women are even better at their jobs than men. Yet, it has been found that women frequently earn less than men. They typically spend more and save less. Because of this, a lot of women do not frequently engage in financial planning.


Women need to realise that achieving independence and education is only the first step. Women need to make wise financial decisions with their hard-earned money in order to complete the second half of the journey. It's not enough to just make money; you also need to spend and save it responsibly. They therefore need to invest time in educating themselves on the possibilities available for protecting their future and learning how to go beyond their normal jobs.


Impact of caregiving on finances and career breaks


Women frequently put their careers on hold or cut back on their work hours in order to care for their children and ageing parents. Less time spent working can have significant financial repercussions, and in some situations, it may prohibit employees from enrolling in company-sponsored retirement plans or disturb their straight career trajectory, which may impair any salary raises that may follow. They must invest in women-specific goals and prepare for the unexpected, given the aforementioned obstacle.


While women must contribute to family goals such as buying a home and children's education, it is equally important for them to identify women-specific goals such as the amount needed for an emergency fund to cover their maternity and career breaks or even a job loss, and to start a separate retirement fund taking into account their longevity and additional healthcare costs, etc., and to define the time period to achieve them.


Women live longer than men


For women, the ageing issue is a hard reality when it comes to financial planning. Women live an average of six to eight years longer than men, according to the World Health Organization. The intricacies of long-term financial management are therefore more difficult for women since they require a larger cash reserve than men do to secure their financial security in old age.


The fact that women face additional challenges because of their gender, which can either slow down or halt the process of saving and investing for their retirement, only serves to exacerbate matters. The gender pay gap is the first issue and refers to the disparity between the median earnings of all men and women working in paid employment.


According to the World Gender Gap Report 2022, gender parity is not improving. To close the gender gap globally, another 132 years are needed. Women's workplace outcomes are worsening as crises deepen, and the possibility of a worldwide gender parity backslide is growing. 


Developing sound strategies


Women who intend to have children should choose a health insurance plan that covers key illnesses unique to women in addition to maternity care. Besides, as monotonous as it may sound, budgeting is the only option. The first step to managing your finances is being aware of where your money is going. You can set money aside for your retirement fund once you've determined where you can make savings.


Moreover, because they look after children and older relatives as well as themselves, women frequently take career breaks or leave traditional job environments, which can have an impact on their income. As a result, they must increase their investments every year as their pay increases.


Furthermore, a Systematic Investing Plan (SIP) is essential to foster discipline and slowly build wealth.


Final thoughts


Almost 20 per cent of the world's population lives in India, which has a literacy rate close to 80 per cent. According to the National Council for Financial Education's Annual Report 2020–21, sadly, just 27 per cent of the population is financially literate. Women make up about 21 per cent of this number. It's time for women to develop their financial literacy and actively take part in household financial planning.


It is crucial for women to understand how money works and to learn how to save, invest, and spend it sensibly. They shouldn't rely only on advice from their friends and relatives. Like they do in other areas, women need to succeed in money management and take care of their own financial health.


The writer is the managing director of Fusion Corporate Solutions and former independent director of Jammu & Kashmir Bank.


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