Women in India have made strides, proving their capabilities and claiming an equal stance in society. However, when it comes to finance and investment, the situation still favours males. Women are more likely to save money than men, but when it comes to investments, women aren’t involved enough. It should come as no surprise that if the goal is to make India a $5 trillion economy by 2025, the women and men of India need to work together. But after all the progress women are making today, what is holding us back from being a financially inclusive society? Let us find out.
The current state of women in the workforce
The participation of women in the workforce in India is 22.3%, which is lower compared to the global average of 47% in 2022. Women also face higher rates of part-time employment and are more likely to take career breaks for personal responsibilities like caring for their children or parents. These factors contribute to a significant wealth gap between men and women, who eventually have lower savings, investments, and retirement funds compared to their male counterparts.
Challenges women face in financial planning
Social inequality
Many families in India have a male as the head of the family who makes all the decisions for the women in the family. According to the National Family Health Survey (NFHS 2019-21), 85% of working married women aged 15-49 participate in deciding how to utilise their earnings, but only 18% of them have the last say.
Financial planning has always been considered men’s expertise, and even women with accomplished careers rely on the males in their families to make investment decisions. Women are often discouraged from voicing their opinions on the family’s future financial plans and sometimes even restricted from working. This deprives women of the authority to plan their financial future.
Gender wage gap
According to a report by the ADP Research Institute, 82% of workers aged 18-24 believe that there is a gender wage gap in the Indian workplace. Women are often paid less and, hence, can spend less and invest less, not having a chance to grow their finances.
Apart from the wage gap, women also face a lack of opportunity where they are diverted from leadership roles simply based on their gender. The belief that men are better leaders persists in many workplaces despite women constantly projecting competitive results.
Lack of financial literacy
Financial literacy is not yet part of the Indian education system, which affects both men and women, but it affects women more than men. A study by LXME’s Women and Money Power Report 20222 suggested that 49% of women in India don’t invest at all, either because of a lack of awareness or fear of risks.
Women end up choosing investment options like fixed deposits or just keeping their money confined to their savings accounts. This diverts them from the benefits of better investment options like stocks, mutual funds, and other compounding options that might be much more beneficial for future financial security.
Higher life expectancy
Women live longer compared to men, and that often forces them to manage inherited finances after their spouse passes away. Since they have little to no awareness of these responsibilities, they get overwhelmed and miss out on opportunities meant to help them.
For example, many women might not be aware of how to claim their husband’s life insurance, or pension funds, or claim ownership of other assets. In some cases, they also fall prey to others seeking advantage of their lack of financial knowledge.
Bias in financial services
Not seeking enough professional guidance is a problem, but there is another side to it. Many women feel like they get looked down upon when seeking financial advice from professionals. Their lack of knowledge and confidence leaves them feeling intimidated, leading to decisions that are not beneficial for their financial growth.
Solutions to overcome these challenges
Financial education
Financial literacy is a key aspect that needs to be focussed upon to empower women. Financial advisors can be considerate and educate their clients about their current financial situation, their best investment options, and how these decisions will benefit them in the future. Financial literacy also boosts confidence, encouraging women to further take charge of their financial plans.
Equal pay and opportunities
According to the International Monetary Fund (IMF), if we can achieve gender equality and equal participation of both men and women in our workforce, India’s GDP could grow by 27%. Women have consistently proven their potential by handling C-suite positions in global companies, but that is just a small percentage.
Separate financial plans
Life is uncertain, but your finances don’t have to be. Families can focus on having a joint account where both the partners contribute towards monthly expenses along with having separate accounts for themselves.
This helps both equal control over how they choose to spend or invest the money that they earn.
Social Mindset
External changes do not matter until there is a change in the mindset of individuals. Most women lack the confidence to own their finances because they are assumed incapable of making wise financial decisions. Families need to involve the women in the house to manage family finances without understating their opinions and helping them be more financially capable.
Results of women being aware of financial planning
Economic growth
As individuals grow financially, so does the country’s economy due to an increased buying capacity, taxes, etc. Similarly, when women are treated equally and are aware of the benefits of financial planning, they are encouraged to participate more in the workforce, elevating their financial strength.
A bigger workforce means more taxpayers, which directly affects the GDP growth of the country. Hence, women involved in financial planning not only uplift personal finances but the economy as a whole.
Improved security
Financial awareness secures long-term finances while also ensuring the social security and dignity of a woman. According to an article published by Rights of Equality, women who are financially aware find it easier to leave abusive households due to their financial backup. It also gives them the confidence to build a life for themselves and their family with a secure financial future.
Role modelling and leadership
The majority of women in India have their children’s education as their top priority. Women’s inclusion in financial planning not only helps this motive but also makes them a role model for the children who grow up with the same ideals. Taking charge of their finances also affects their leadership skills since they become more responsible and informed through the process.
Conclusion
Women make up nearly half of the population of the country, making their contribution extremely crucial for national growth. Although the inclusion of women in finance is a step towards financial independence, it is also the start of a social change in our journey towards ending gender discrimination.
In current times, financial security should be non-negotiable for any individual. If you are a woman who hasn’t taken that step yet, start reaching for your financial security and freedom today.
