Are Women Financially Empowered?

Women have broken the shackles of society to enter big time into workforce and become an earning member of the family. While their struggle to break the glass ceiling of organisations is well chronicled, an area that is often ignored is their opportunity to manage the money they are earning. In a recent study that we conducted (within India), 77% of women stated that their money is managed either by their spouse or by parents. What’s driving such a low adoption of money management for women? What challenges are they facing?

When we deep dived into our data, 4 distinct reasons have come out for this low adoption:

  1. Central Management in Family: This is the most common reason stated by many women who are not managing their own money. Their husband or parents (mostly father) is managing money when they became an earning member and hence, they prefer their money to be managed together. However, we have not observed the same with men — when they become an earning member, they tend to manage their own money. Women preferring the money to be managed centrally is sometimes based on their own volition while in many other cases, existing social norms dictate that behaviour. While social structures are being broken for women to have careers, they still play a dominant role in how the money is handled.
  2. Relationship Management: For women who take charge of their own money, they are still facing challenges in dealing with many Relationship Managers. I have a mentor who is Head of a major Financial Services Organisation. Though he understands the industry & products well, his money is managed by his wife who is an astute decision maker. Whenever any senior relationship manager from bank(s) visit them, they always address him (and often ignore his wife) even though he states upfront that all money related decisions are made by her. This may not be the scenario with all Relationship Managers but definitely most people are still caught on to age old practices where the decision maker is male. Financial Services Industry has to adapt to the changing trends in the society and train relationship managers to be more sensitive towards women.
  3. Low Self Confidence: Only 23% of women we have polled have understanding of financial jargon. Most women feel that they are not capable of making right financial decisions. Interestingly, of all men we have polled, only 25% have understanding of financial jargon but most men expressed tremendous confidence in making right financial decisions. While we all can discuss about increasing financial literacy, I think it’s even more important for Financial Services Industry to simplify money management decisions. While every other industry is moving towards being customer-centric and taking complexity out of their lives, financial industry is yet to make significant traction in this space.
  4. Lack of Innovation in Products: Financial Industry has not seen innovation in core products. While there are multiple derivatives that have come into play, core products in itself have not changed over decades. People have evolved and their needs are constantly changing, yet financial products are not evolving at the same pace. Most women feel that their requirements for money are not being catered to by the industry.

Independent of the reasons, this low adoption of women managing their own money is worrisome. We have seen women who either lost their husband or separated face tremendous challenges in managing their money as they are forced to pick up this skill while going through a difficult phase of their life.

It’s high time women step up to achieve financial independence.

Also, as an industry, it’s time we create platforms for women to effectively manage their money in pursuit of their financial independence. Women have strong financial management skills and they are proven in every house by how our mothers managed expenses of the house from shoestring budget that they have got and yet figured out a way to still save money for the rainy day. We see many talented women in financial services (most top ranked financial services companies in India are headed by women). I have personally seen many women appear for CFA, CA, CFP exams and clear them with flying colours. Women have the capability to make excellent financial decisions but as an industry, we have to embrace them, promote their financial independence and give them right platforms & opportunities.

What do you think?

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