When it comes to professional careers, Indian women have come a long way in the last century. In fact, it’s normal for a woman to have a day job or run her own business.
As a result, today many women are making a significant income, if not equal or more than their husbands.
However, when it comes to managing our money, we have a lot more work to do. Specifically, we continue to rely on our husbands on money matters, we’re overwhelmed with investment jargon, and we are narrowly focused on income and budgeting.
I recently have the privilege to meet Amanda Steinberg, the author of “Worth It – Your Life, Your Money, Your Terms” and blogger behind DailyWorth, that helps women earn more, save more and spend smarter.
In this article, I’d like to share with you my key takeaways from Amanda’s book as it relates to Indian women and how you can apply these learnings in your own life.
Our Problems with Money
At the most fundamental level, our problem with money arises from the stories we tell ourselves. Our personal experiences, thoughts, perceptions and ideas about money, shape our beliefs.
Specifically, there are four problems we have with money.
I need to spend money on luxury goods, nice car and clothes
You have an excellent, well-paying job. You frequently meet with customers or are seen as a role model in your community of friends and family. Or you are expected to buy expensive gifts for loved ones just because you’re getting paid a hefty amount at your job.
This puts tremendous pressure on you. You’re expected to dress well and exude confidence. You’re expected to be a nice, giving person.
This type of external pressure knowingly or unknowingly forces you to purchase luxury goods, expensive cars or the latest fashions. These costs up quickly, leaving you little or no savings.
I can’t be spiritual and care about money – they’re opposites
Men are “built” to reason and provide. Women are supposed to emote and nurture. This belief is highly prevalent among Indians.
Specifically, Indian women are expected to be religious. A woman’s job is to pray for the family’s well-being. Women are not expected to manage money. That’s best left to their husbands or men in the family.
It’s true that women are responsible for the monthly budget or bringing in a steady income. For instance, housewives are given a set amount each month. Or professional women bring in a paycheck each month.
A major portion of the paycheck, if not the entire amount, is deposited in the bank account that is managed by the husband.
The point here is that women generally don’t to have the overall financial picture.
Asking for a salary raise will get me fired
In the workforce, men are associated with aggression, independence, and competitiveness. Women, on the other hand, are associated with being nurturing, nice and altruistic.
Women who exhibit the feminine traits are seen as lacking leadership qualities. On the other hand, women who exhibit the masculine traits are seen as unfeminine, mean and unlikable.
This “double-bind” works against women and they are frequently not given appropriate salary increases. According to Amanda, this problem can be solved as soon as women take ownership of managing their money.
Women can and should ask for salary increases without apprehension, guilt, fear or shame.
Managing money is too technical
The money jargon we hear in the news or from our significant other can be overwhelming. Words such as stock (also known as shares or equity), bond, index, portfolio, diversification, asset class and asset allocation sound too technical.
We’re already tired of working all week in addition to taking care of our family. So trying to learn money jargon is one more thing that we don’t want to do.
But managing money doesn’t have to be technical. All you need to do is carve out less than two hours to understand the basic terminology to get you started.
How to Overcome Your Money Problems
Change your money story
We need to change the stories we tell ourselves. For example, we need to stop saying:
- My husband/partner will take care of me, should we run into money issues
- People will think I’m selfish if I talk about money and don’t give gifts
- Men are solely responsible for managing money
- I have bad luck with mone
Instead, we need to replace these statements with:
- I’m good with money, money is force for good
- Money is a spiritual expression
- Saving money doesn’t mean I’m selfish
- My earning capacity is limitless
Focus on Net Worth and Self Worth
“Net Worth” are the two golden words. All this means is that you want to take an inventory of your assets and loans/debt. Add them up and you’ll end up with your net worth. Your goal should be keeping your net worth headed in the positive direction.
Assets are primarily composed of the market value of your home, cash savings, investment account, and any other savings accounts. Loans and debt include any mortgage on your home, car loans, credit card debt, and any other types of loans.
If you have a negative net worth, don’t be hard on yourself. Instead, you need to take the steps towards a positive net worth by reducing your loans and debt.
In addition to Net Worth, you want to focus on Self Worth. You are the best judge when it comes to self-worth. Don’t sell yourself short.
Take the time to understand basic financial terminology
As we discussed, investing and money management doesn’t need to be difficult. Below are definitions of common money jargon in plain English.
Asset: It is a financial thing you own
Stock (also known as shares or equity): Ownership in a given company
Bond: A loan you make to a government or company
Index: A number that measures a sector of the economy. The Bombay Stock Exchange (BSE) is an index of Indian companies.
Portfolio: Your investment in assets such as stocks, bonds, and gold.
Diversification: Owning different kinds of assets
Asset Class: Categories of various things you own. For example, “stocks” is an asset class. Similarly, “bonds” and “real estate” are also asset classes.
Asset Allocation: The distribution of your investment across different asset classes.
Fund: A mix of stocks, bonds, and other cash equivalents.
Manage our money without shame, apprehension, guilt or fear
Once you start taking ownership of your finances and understand how money works, you’ll experience long-term happiness.
When you start to manage money, do so without shame, apprehension, guilt or fear. If you are married or in a relationship, be honest with your partner and explain why it’s necessary for you to have the overall financial picture.
Two Actionable Tips For Your Money Problems
Now that you have an understanding of our problems with money and how you can overcome them, I’d like to wrap up with two actionable tips that you can implement right away.
These tips will allow you to increase your Net Worth, so you can experience an excellent financial future.
Invest in Lost Cost Funds such as an Index Fund
When you make an investment, be sure that you are paying very low investment fees. For instance, if you hire an investment advisor, you may be paying a hefty fee for someone to manage your money.
Investment fees of 0.05% to 1% are generally acceptable but anything over 3% is high.
Paying high fees, means you get to keep less profits from your investments. Higher investment fees are not only detrimental to you in the short term but also in the long term. You’ll earn less compound interest on your investments and can negatively impact the value of your overall portfolio.
Don’t Underestimate the Power of Compound Interest
Let’s use an example to illustrate the power of compound interest. Say you had an extra Rupees 15,000 each month that you decide to save in the bank at a fixed deposit rate of 8% per year.
After 10 years, you would end up with 26 lakh rupees. After 20 years, you would end up with 83 lakh rupees. And after 30 years, you would have a whopping 205 lakh rupees.
Thus, money that compounds over a long period of time, grows significantly.
I hope you got much value from this article. In summary, Indian women need to take greater ownership of managing their money. Budgeting and income generation isn’t enough. Managing your money is necessary.
When you start ownership of your finances, it is necessary to have control over your emotions. This means not rushing into making investment decisions and not letting your own stories about money get in your way.
Finally, be fearless and don’t let shame or guilt get in your way.
Jinal Sampat is a jewellery designer at Sampat Jewellers Inc. Her focus is on innovation and creation of jewellery pieces that are meaningful and hold long-term value. She creates versatile mangalsutra designs with Indo-Western elements. Jinal holds her graduate degree from Rhode Island School of Design (RISD). You can find her on Instagram.
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