MT14 | Your Finance Wants To Get Engaged (Investing For Women)

So, you can multitask like a goddess with 10 arms, but not one of those arms is managing your money? Or maybe you’re the woman who has your entire work project mapped out in your head yet you have no roadmap for your personal financial journey? Or maybe you’re your family’s go-to gal for all sorts of non-googleable facts but you have barely any idea about your bank balance?

Money management for many people, especially women, can feel a bit like flossing. You know it’s important, but you keep putting it off because you hate doing it so much. But with Covid making lives and livelihoods more uncertain, don’t let this be the One That Got Away. It’s time to get engaged with your Finances.

Discussion Topics: Your Finance Wants to Get Engaged (Investing for Women)

• Back in the 19th century, women had almost no role to play in money matters; it’s often the case even now
• This is due to several reasons: education, conditioning, wage gaps, confidence, and risk-taking are examples
• But it’s important to break through all that and take charge because life, health, and marriages are uncertain
• Get started by listing your assets, setting up nominees, scanning important documents into a shared album, and setting up a password manager

Transcript: Your Finance Wants to Get Engaged (Investing for Women)

Hi, everyone, welcome to another episode of MoneyTok, where we help make personal finance and investing simple and accessible through both my own experience. I’ve been doing this for about 20 years now. This show is about money and wealth creation. And we talk about so many ways of making money, bought retirement planning about stocks, bonds, gold, real estate, crypto, and so many kinds of things.

Hi there. I’m Amit. And I’m Neha. We’ve both spent almost two decades working, saving, and investing our money till we achieved something close to financial freedom.

In almost every episode of this show, we provide a simple resource to help you get started and potentially save you hours of work on your financial journey. And today we bring to you a simple template to list out your family’s accounts and assets to make it super simple for you to start getting a true picture of your financial situation.

There is this scene in the movie Little Women, where the character of Amy calls marriage a financial proposition. Back in 19th century England, women were not allowed to undertake paid work. Worse, upon marriage, all their assets were automatically the property of their husband, and the only way for a woman to move up in society was to marry rich. Women were considered just too silly to handle anything as serious as money. And that was the situation in England, which was supposedly a liberal, modern society. So it was probably the same or worse in most parts of the world, or at least wherever there was a patriarchy at play. Women were not allowed into the world of finance, and therefore never developed the confidence to deal with finance.

It’s not much better even in the 21st century. A 2014 report from Merrill Lynch found that 55% of women agreed that they, “know less than the average investor about financial markets and investing in general.” And men – only 27%. Another study by financial planning website LearnVest, which actually surveyed around 100k people found that only 27% of women feel financially confident, vs 45% of men. In fact, it also reported that men are five times more likely than women to name investing as their top financial goal, regardless of age. These stats actually don’t surprise me. Even back at home when I was growing up, my mother took very little interest in our family finances, assuming my dad would handle it all. And this is despite the fact that they both worked in the government, earning the exact same salary!

I grew up with that conditioning too. My father was the one handling all the financial decisions in the house. I never saw my mother show any curiosity about where the money came from and where it went, nor did she express any opinion on where and how it should be invested. It was something my father took care of and she happily relinquished that duty to him. She would just sign wherever my father asked her to and occasionally went to the bank to withdraw cash or manage the locker.

And I am sure this was the case in many other families. Women were not expected to have much to do with money. I remember my first day on the trading floor. Not used to having a woman around, abuses were used more as punctuation than to actually express any sentiment. But my presence seemed to stifle that. After every sentence, men would turn to me and apologise for the vernacular, somehow implying that while I am a trader, I am too dainty to be one. I didn’t honestly blame them.

But Neha, all that was in our parents’ generation. But women have moved on since then. For a start, many more women work in well-paying jobs, right? So why are things still the same?

I think broadly women tend to have a ‘friends-with-benefits’ relationship with money. If they are single, the paycheck comes, a portion is spent, and the rest maybe lies in the account. If married, it’s even more hands-off where you know the spouse is managing it, and you don’t really have to bother with financial planning. Heck, I am guilty of it myself and I am a trader! And it really boils down to a few societal and psychological conditions that the gender gap has propagated.

Like education. Traditionally men were more educated than women, and so the man of the house being ‘smarter’, also would understand the world of finance more. Though that trend is reversing, at least in the US, for poorer economies we are still not there. The literacy rates are heavily skewed in favor of the male sex. The proportion of couples in which the husband had more education than the wife dropped almost 10 percentage points, from 24 percent in 1980 to 15 percent from 2008 to 2012. During the same period, the share of couples in which the wife had more education than the husband increased from 22 percent to 29 percent.

Actually, another reason could be salary disparity. Now I know this isn’t always the case, but I get the feeling that in general women continue to marry men whose income exceeds their own, perhaps because as a society we still think of the man as the breadwinner. And even they start off roughly equal, over time due to pay disparity or career breaks due to maternity the woman begins to earn less than the man. So if the man brings in the higher income he probably then assumes responsibility for all the income.

That’s right, but there’s a lot more. We have, what I call hardwiring reasons like Risk aversion. Women are hardwired to be caregivers. To create a steady environment at home. And that runs counter to the volatility that the financial world suggests. Seeing up and down movements in one’s portfolio is not something most women would be comfortable with. This is also reinforced by the lack of women on trading floors.

Then there is a lack of confidence. Women tend to second-guess themselves more. They want to be very sure of their ability to do something before plunging themselves into it. It runs true in a work environment and also percolates to investment decisions. And investment decisions rarely come with a 100% guarantee. There is an element of risk or unknown in it.

A hands-off relationship. Somehow money is not something that we are very vocal about. If we have it, a regular paycheck, that’s all the relationship we have with it. We hesitate to ask for pay rises at work or market ourselves for paid work as a freelancer. It’s just something we would rather not think about. Of course, these are generic statements, and you individually may not identify with some or most of them, but as a whole, they do contribute to women being less enthusiastic, curious, or involved in financial planning. And this is a pity because it is critical for your own sake to be fully involved in your finances

Absolutely right Neha. In fact, this whole thing about women taking control of their finances became very real to me recently. A member of my extended family – I won’t indicate who to protect their privacy – very unexpectedly passed away a few months back. He was relatively young so nobody thought anything like this could happen, least of the person himself, it seems. Because it turns out that he never shared any financial details with his family. He’s left his wife and children with no idea what they have or how to get it. They live out of India, away from family support so the entire burden is on them to figure things out and go from pillar to post trying to claim ownership of their assets. All this while also trying to come to terms with his passing and trying to pick up the pieces of their lives. Just really crazy.

Needless to say, marriages are also not the unbreakable bond they used to be. As divorce rates creep up, women need to be sure they are not left high and dry in the case of a separation. That they know what the full pie is, and therefore how the pie should be split.

And if you’re single (and this goes for men AND women), it is even more important to know how to manage your money. You may be happy to have power over your own spending but don’t let it just be that. Don’t treat your salary as just something you can use to buy clothes, travel and not bother about the surplus. Find out how you can invest, so you don’t have to rely on the paycheck in due course of time. Wouldn’t you want to strengthen your independence and level of confidence knowing that your money is also at work while you are?

4 ways in which you can get started

This really the base motivation for my podcasts too. I was once a complete Finance Noob and understand completely how it can seem fairly daunting to start on this journey. But even if you aren’t keen to get into the nitty-gritty of your finances, there are a few basics you should definitely have in place. if you are a woman, you need to know enough to be able to act independently. And if you’re a man, you have to do enough to make sure your spouse, partner, daughter, or parent is not left in the lurch if something bad happens. In fact, Neha’s father has a system that is a great example for all of us to follow. And we in fact have based today’s asset listing template on what he did for his own family.

Yes. A great example of how to do this is what my father has done. He has raised 3 daughters, yet he has always stressed the importance of full transparency in investment decisions. He made detailed sheets of every account and investment and ensured my mother was fully conversant with them. You could do something similar. So, make a list of all your accounts and investments: For bonus points, you could even update it every month. Like exercise, It may seem like a chore initially, but soon it will become a healthy habit. It will give you a good snapshot of your financial health and breakdown by investment/ bank type at regular intervals.

Second, wherever it is possible, add your partner as a nominee so they can easily gain access to the account in case of your passing. Again, my hero here is my dad, who used the list to set up nomination details for all his accounts and financial holdings

Third, Digitise all your documents. Take scans or at least photos of all your important paper documents and save them as an album shared with your partner

And fourth, use a password manager for your financial accounts. Password managers help you create and securely save complex passwords which is great for the security of those accounts and it allows nominated individuals easy access when needed. Honestly, this is so cool and so important for financial security that I’m going to do another episode just on this topic.

So in summary, if you aren’t already on top of your financials, now is the time to take charge. It’s easy and takes just a bit of effort to get going. And if you don’t know how to start, just copy our handy financial assets template and get going!

I hope we have been able to motivate at least some of you to take the first few steps toward having a more intimate relationship with your financial growth. If you could resonate with any or all of the reasons holding you back that we talked of earlier, know that you are not alone. But the cost of staying with the doubts and lack of confidence can be very high in an uncertain future.

Well, that’s it for today. Thank you very much for tuning in. Do check out our free template and all the other resources on our website. And if you have women in your life that you care about, please pass this episode to them. If we can save even one person from the trauma that my relatives went through, it will be worth it.

We are Amit and Neha with MoneyTok. See you next time.