Make Money And Work Better For The Family

By: Sujatha Rao

During the late nineties, a middle-aged couple walked into our Bank branch one fine morning. The man informed me that his wife had recently come into some inherited money from her parents. He went on to say that he wanted to park the money temporarily in some good investment products. While he was talking, his wife looked nervous, edgy, and was silent throughout. Finally, a decision was made by the husband to park it temporarily into a Fixed Deposit for a period of six months. 

As I was filling in the relevant forms, the husband asked his wife for the cheque book. His wife promptly took it out of her bag and handed it over to her husband. As he cut out a cheque leaf, I politely offered to fill in that one too. Declining my offer, he filled it in himself and pushed it towards the wife to obtain her signature. 

Handing over the signed cheque leaf to me he said “My wife is a graduate, but she is all thumbs when it relates to any kind of financial matter.”

From the corner of my eyes, I could see the embarrassment and distress on the woman’s face. I turned with a smile towards the lady and said “It’s okay Madam. Even I hardly knew any of these matters a few years ago. We are here to help you. Don’t worry.”

Unfortunately, I was witness to the same lady walking into the branch as a widow in a couple of years, close on the heels of her grown-up son, her absolute helplessness writ all over her face. A similar scene repeated yet again, this time with the son taking the place of his father.

Sitting on the other side of the various desks in the Bank, in a career spanning across two and half decades, I came across many people, especially women, getting overwhelmed when it came to taking serious decisions about their financial matters. There have been quite a few cases of such hapless women being cheated of their inherited assets by their own kith and kin majorly on account of their total lack of knowledge about the financial matters. 

Right from filling in the application form to making sense of the myriads of financial products comes across as a daunting task for people from all walks of life. Despite the best efforts at simplification of many a matter over the years, both from the regulatory authorities and the Banks, the KYC procedures, the number of pages (though reduced considerably now) in the application forms and the mandatory regulatory declarations still seem to unnerve even an educated customer.

In this regard, the system also is somewhat helpless as too much simplification is fraught with risks as all financial systems continue to be vulnerable to frauds of various kinds. 

Having witnessed how traumatic the situation could be for a large section of people who were always at the mercy of someone in the family for carrying out the simplest of financial transactions, I feel it is time we focused on improving this situation for the better.   

Of course, over the last decade, things definitely have moved in a positive direction. But the pace at which the growth has happened/is happening leaves much to be desired, especially in respect of women managing their own finances. 

According to a report on Financial Literacy and Inclusion in India by the National Centre for Financial Education, in 2019 only 24 percent of rural and 33 percent urban Indians happen to be financially literate. Out of this, the female gender accounts for an even lower 21 percent.  

The following table details it out further in terms of the age-wise distribution of the said data. From this data, one can gather that across all the age groups, the percentage doesn’t go beyond 30%. 

This compares very poorly with the overall “Literacy Rate of India in 2020” which stood at 77.7%. It’s time we attempted to bridge this gap between “General Literary” and “Financial Literacy” by educating people about the latter right from a very young age. 

In this connection, it is very encouraging to note that RBI is planning to introduce financial education in the school curriculum through its national strategy for financial education 2020-2025. The challenge however is the fact that “financial literacy” is not only about “knowing” but it’s more about “practicing.” 

It’s a skill that needs to be built over the long term through practical experience. Such a skill-building exercise can perhaps be better handled through developing interactive games on relevant topics as that might stand a greater chance of adaptability with the current techno-savvy generation.

It is heartening to see women making significant strides in terms of breaking the stereotypes by getting into careers in those fields which were hitherto considered belonging to male bastions. However, when it comes to managing their financial matters, I feel the same visible progress is found to be still falling short.

Since this helplessness is more severe amongst women than in men, the following simple tips are being listed out mainly aimed at women who remain uninitiated in this field, for overcoming the challenge slowly and steadily:

Take charge

As the clichéd saying goes, “thought is the beginning of any action.” Women are great at managing their daily household finances and accounts. By deciding to change their attitude and thinking process towards managing their bank accounts and investments, they would be able to kick start their financial journey outside of their homes too. 

Go digital

For carrying out banking transactions, we need not even step out of our houses these days. The same way women learned to text, Whatsapp, navigate the internet; they can learn the nuances of digital banking too with ease. By going through the demos readily available on mobile banking apps, they can very easily learn to navigate these.

At the same time, they need to understand the risks associated with cyber crime too. 

I have heard it said many a time that people stay away from going digital as they are terrified of the risks involved therein. However, even manual banking is fraught with its risks. If we are prudent enough to follow safe banking norms such as; never sharing our passwords and PINs with anyone; avoiding public internet cafes, not responding to spam messages, etc., we can by and large safeguard our hard-earned money without falling a victim to cyber crime attempts. 

Initiate baby-steps

For starters, women ought to aim at taking up very small online activities. If they are not comfortable, let them not transact on online banking platforms initially. Simply observing the screens and learning to navigate the system first will give them a sense of comfort over a period. Once they gain confidence, they may want to transact with very small amounts. Many of them might already be habituated to using the Debit card for their cash withdrawal needs. They can slowly learn to use the same for online payments too.

They may even want to start with bill payments online if they have not been doing the same earlier. These are very small amounts and many an online platform allows the bills to be uploaded automatically after their online registration. This way, they don’t have to remember the due dates.

Understand investments 

Many a woman suffers from deep-rooted investment inertia. This may result into large amounts lying in their savings accounts, earning a meager interest rate of less than 4% p.a. When asked, a few of my friends expressed their interest to earn a better rate of return, but each of them kept postponing the decision to start that Recurring Deposit with the Bank or that SIP in a Mutual Fund.

Some women were convinced about earning very good returns from chit funds being run by someone known to them. These women withdrew certain amount in cash every month from their savings accounts towards their monthly payments to these chit funds. Both deposits into and withdrawals from these chit funds happened only in cash as the said chit funds were not registered anywhere. In this way, the account for money in their savings account was being routed through unaccounted for channels and their entire amount of investment ran a very high risk of not being protected.

It wasn’t that they understood the intricacies of how the chit fund installment amounts were getting computed or even what the rate of return on their investment was. Even then these women seemed to prefer this investment, in their desire to maximize their rate of return, to the safer and more secure investments in Banks or Markets which are under the scrutiny of so many regulators. 

It’s prudent to begin the investments through regulated channels with a proven track record. For this to happen, people have to invest time in understanding the product they are about to put their money into. ‘Knowledge’ in this regard is power. If they are not inclined towards doing so, they may want to seek professional help at a fee for reaping the benefits in the long term.

In the ultimate reckoning, our money matters and irrespective of gender, we should all strive towards making it work better for us. But, if the women are nudged towards greater independence in handling their own financial matters, it would serve the entire family better in the long run.