Financial Planning


Friday, May 08 2020
Source/Contribution by : NJ Publications

There is something about women and money that doesn't seem to quite fit together in minds of most of us. We all generally have a tendency to stereotype people and make generalisations about a person,community, geography and gender. When it comes to finances too, we hold may notions and myths. In this article, we would be revisiting few of the long-held myths about women and money or finances. Going beyond the title, the article also attempts to look at the bigger picture behind these myths and the need for us all to change...

The myths about women and money...

Myth: Women are impulsive spenders and they spend a lot
Fact: Women are wise & careful spenders
We believe that those who purchase something on impulse do not have the self control to follow a budget and spend in an organised way. We also generalise women as more like to indulge in shopping on impulse.

The fact is women have regular spendings on small inexpensive things, mostly for utility or purpose. There is logic to assume that small impulsive spending within the overall budget means a person lacks discipline & control on financial matters. On spendings, a US Bureau of Labor Statistics report concluded that there is equal spending by both genders and the main difference is that single men spend more on electronics, entertainment, while single women spend more on apparel and services.

The clear this myth further, there are also studies that concludes that women share more feedback on 'what' and 'where' to shop within their circle. We also know that they more loyal and bank on trusted shopkeepers & portals and demonstrate eagerness to search for discounts & deals and also bargain harder than men. One interesting study found that 72% of women had reduced their retail spending in the recession compared to only 62% of men*1. All these observations and opinions point to the direction contrary to our myth...

Myth: Women are too emotional for financial decisions
Fact: Women have the 'right' emotions needed for financial decisions
Studies have found that emotions of men generally tend to be around 'greed', 'fear', 'chance' and 'certainty'. The emotions of women generally revolves around 'security' of investments, and some 'uncertainty' of their own decision as being unwise or risky. Hence, women are more likely to seek financial advice just like they are more likely to seek road directions compared to men. Men, in comparison, feel and act more confident in financial matters, whatever may be the reality! Being careful and seeking opinion is much better than being confident & not seeking advice when needed.

Myth: Women want men to manage finances while they focus non-financial household roles
Fact: Women are capable & want to participate & contribute in all household matters
This myth has roots in the ancient premise of the division of household responsibilities in a patriarchal society, which we are even today. We expect women to manage the household while men are to earn and provide for the necessities & safety of all. Well, the times have changed a lot and today more women are equally educated to their male spouses and are often also earning independently. The fact is, whether earning or not, women do have substantial responsibility for family finances. Most of the consumption decisions are driven and influenced by women. As household managers they have to handle the expenses to the budgeted money and needless to say, there is a very long list of expenses in any normal family. They are much more aware of inflation and market prices then men are.

Being more informed & educated, more women today desire to participate actively and contribute in financial matters of the family. If women can participate in financial decisions, it more likely that the outcomes would be more balanced and informed. It can also be very crucial at challenging times.

Myth: Women are not good with maths & financial skills
Fact: Women and men have equal ability to learn and apply maths & financial skills
Let me begin by recalling the most famous name in mathematics in recent history. Shakuntala Devi, was known as 'human computer' and was famous for mental calculations. She made to the The Guinness Book of World Records in 1982. The MD at International Monetary Fund (IMF) today is Christine Lagarde, a women. In India too, women hold top positions in many financial institutions like Chanda Kochhar - MD & CEO at ICICI Bank, Shikha Sharma – MD & CEO of Axis Bank, Vinita Bali – MD of Britani Industries, Naina Lal Kidwai - Group General Manager and Country Head of HSBC India, Renu Karnad – Director at HDFC, Chitra Ramkrishna – MD & CEO of National Stock Exchange (NSE), Roopa Kudva - MD and CEO and CRISIL and so on.

The list is unending and we can easily see that women hold key positions in some of the biggest names in the financial industry alone. Even in area of financial planning there is growing number of women advisers. As per the U.S. Bureau of Labor, in 2010 that over 30% of personal financial advisers were women. There are more than enough examples to dispel this myth. A study by University of California researchers, on two rural tribes (one with equal land & education & one male dominated) in India and concluded that environment, not gender, determines a person's math abilities*4. But on a different thought, we can even question the need for financial skills or maths in financial decisions. Isn't successful investing more about common sense and managing emotions rather than display of any technical expertise?

Looking at the bigger picture: State of women in India
Despite rapid economic growth, women have not been able to play a larger role in the Indian economy and the inequalities & prejudices remain as deep as ever. The 2011 United Nations Gender Inequality Index (GII), which considered factors like labour force participation, reproductive health and education, ranked India a depressing 134th out of 187 countries, behind countries like Saudi Arabia, Iran and Iraq.

There are strong cultural prejudices in India for women empowerment and financial independence. Women in India have always worked but there is undervalued. However, things have started changing and today more girls are getting higher education and we can see more women working in cities away from home. The government of India has also worked towards women rights and empowerment through various programmes & legislations.

Need for change in us:
The women in our lives are very special – mother, sister, daughter and wife. Unfortunately, these special persons do not often enjoy the same importance & participation in decision making, be it financial or otherwise. We all need to get out of our stereotyped image of women and work towards their financial literacy, empowerment and freedom. We need to shed our prejudices, and bust our myths. By opening our minds, we will not only bring a change in our lives but a change in the entire family, community and also for the entire country. Women are half of India's demographic dividend. If they are given the financial independence and the respect they deserve, it could boost the growth engines of our country.


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