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Financial Planning for Women

, October 11, 2012, 3 Comments

Women are underserved and underestimated as consumers
~ Geraldine Laybourne

The general perception is that only men ideally need financial planning.  Most educated and working women feel that managing money is a man’s job. Why does they don’t like to take control of money? It’s because of conditioning. For long, women have been told that they don’t understand money matters and should stay away from them. Also, finance is perceived by women as a complex and boring area.

Truth is that women equally need the financial planning service as much as men. In fact women prove to be better Financial Planning clients as they are considered to be financially more concerned and better savers then men. Men and women have a different set of financial priorities. While men want to increase wealth and get rich, women focus more on financial security for their children and themselves.

The corporate demographics have changed drastically during last few years with more and more women taking up jobs. As a result, disposable incomes of households have increased which have created a need for professional money management. Apart from working women, homemakers should also take personal finance seriously. They can save and invest regularly from the monthly allowance they get to run the house. This small habit may create a sizeable corpus in long-run (over and above the investments of their husbands).


While men enjoy a continuous income throughout their working lives, women often need to take breaks especially when they have children. Some other factors also force women to take a break from professional life like orthodox family backgrounds, change of location post-marriage, transfer of spouse, household responsibilities etc.

Also, the life expectancy for women is higher than men. So, they need a higher retirement corpus. It has been found that, on an average, women live 5 years longer than men, earn 25 percent less during their life time and work 11 years less in their careers.

The risk of life is increasing with rising accidents and stress related ailments. The rise in divorce rates is also alarming. A well-managed separate portfolio can help women in facing the financial challenges, in case they face any. With more women opting for jobs, disposable household incomes are rising and a professional financial planning advice can help them in optimizing their financial resources.

A survey by HDFC Life sometime back revealed that urban women have low financial freedom and they need improvement in the Financial Planning area. Majority of the urban women listed children’s education as their top financial priority followed by health expenses, family holidays and house rent or EMIs.


The financial decisions of women are highly influenced by their family and friend’s views. Despite the fact that a lot of women handle their household finances, they delegate the investment job to their spouses. They do not take active role in personal finance matters which can be critical to their financial well-being in later life. They don’t know if they are nominees in investments, if their husbands are insured and for how much, how will be their post-retirement financial life. In fact, many women don’t even know where the important financial documents are stored.

Another common money trait among women is buying jewellery on a regular basis in the guise of investment. Remember jewellery cannot be considered as an investment. They should rather go for gold funds or gold coins / bars.

The savings and investment methods used by most women continue to be traditional.  Most women have a weak asset allocation with exposure limited to Savings Bank Account, Fixed Deposits, LIC policies and jewellery. Women tend to have a conservative risk appetite and hence they generally avoid equity shares and mutual funds.


To start with women should maintain an emergency fund covering 3 to 6 months expenses and it should not be touched unless it’s a real emergency. They should save and invest as much as they can during their working life and get the maximum time and compounding benefits. The earlier one starts, the less one will need to invest to achieve financial goals.

Remember that investments should be goal oriented. So, women should map all their investments with financial goals like children’s education or marriage. Systematic monthly investments help in building up a decent corpus over time. Women should keep on raising their investment contributions especially after salary increment and/or bonus receipt.

Single women in their 20s have the ability to take on higher risks and can allocate a big portion into equity and equity-related investments. If they have invested in equities and equity-related mutual funds, they should not get disturbed by short term fluctuations. For women closer to retirement, investment should be made in less risky and safer investment options like liquid and debt mutual funds or fixed deposits for a safe and steady flow of income.

Instead of taking a complete break from career, women can consider working part-time. For example teaching a hobby like yoga, dance, cooking etc. can be a good way to earn a regular income without full-time commitment.

Do not forget to use tax exemptions and deductions appropriately. In case of investing in property, take a home loan as it will reduce tax liability. In the end, regular tracking and review of savings and investments is an essential part of prudent financial planning. Successful Financial Planning not only involves regular investments but regular review of investments too. Financial goals need to be reviewed again with changing times.

To conclude, Financial Security for women is a necessity in today’s world. It doesn’t matter what is their age, or marital status, or professional status (working or a homemaker). A Comprehensive Financial Planning approach can take women towards financial empowerment. All women need to believe is that they are the best judge of their financial needs & concerns. So, it’s better for them to take the money management baton in their own hands rather than expecting someone else to do it for them.

About author
Dr Naveen J Sirohi is a Ph.D. in Commerce from CCS University and a Certified Financial Planner. Currently he is Assistant Professor (Finance) in the Department of Management at BCIPS, New Delhi. He has more than 10 year of experience including HDFC Bank and Corporation Bank. His domain expertise include Personal Finance, Financial Management, Risk Analysis & Insurance Planning, Retirement Planning, Taxation, Security Analysis & Portfolio Management and Financial Statement Analysis. Dr. Naveen also runs a Consultancy firm, PRUDENT ADVICE, providing Financial Planning services assisting clients achieve financial freedom. ...more
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  • Finance Society

    Sounds reasonably good, but not so impressive! Seems you haven’t gone through empirical research on similar issues by Barber & Odean, such as Boys will be boys… and so on.
    It looks like putting the theories together and wave an article, no solid arguments or evidence as such. You need to work a li’l harder. Good luck ahead.

    • Dr Naveen J Sirohi CFP

      Dear Finance Society,

      Thanks for your review and comments.

      The article is targeted more for the masses and not much for research scholars. Hence, the empirical findings were omitted.

      We will appreciate if you leave your identity for better interaction. Thanks again.

    • Dr Naveen J Sirohi CFP

      Dear Finance Society,

      Thanks for your review and comments.

      The article is targeted more for the masses and not much for research scholars. Hence, the empirical findings were omitted.

      We will appreciate if you leave your identity for better interaction. Thanks again.