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Women are born managers

Thursday, April 12, 2018

By taking active interest in managing family finances, they will play a crucial role in achieving financial goals, says Abhay Gadiyar

As the story goes, a leading management consultant was approached by his client, an engineering company. They were facing a peculiar problem where consumables like screws and nuts were short in stock at the crucial juncture of major orders. This involved a last-minute rush in ordering small but important items. He was at his wits’ end searching for a solution. While having his afternoon cuppa with his wife, he realised that he always had his favourite drink with a ready stock of coffee powder, sugar and milk in the house. There never was a last-minute rush to buy any of the ingredients. He was curious to know the reason for this. The wife had a simple solution. She was using a transparent jar to store the week’s requirement and was replenishing this easily looking at the diminishing stock.

He suggested this solution to the company to store the regular requirement in transparent jars. It goes without saying that this imaginative solution was immediately accepted by the Company.

The story is in every household. It proves that women are born managers. However, when it comes to personal finance and savings it is seen that many women leave it to their spouse to handle investments.

Here are a few tips on savings and investment planning to be handled by women.
1    Make a list of all monthly expenses using a simple excel sheet. Categorise the expenses into Mandatory, Important, Nice and Unnecessary. Try to delay or avoid all together the expenses under the last two headings.

2    Please include annual vacation, term fees and domestic staff bonuses in relevant months.

3    Make a total of annual expenses.

4    Have adequate term insurance. This is to ensure your continued contribution to the home even in the case of untimely death. Consult a professional insurance advisor to know the scientific formula of Human Life Value. This will let you know the exact amount of insurance cover required.

5    Get adequate Mediclaim of minimum Rs 10 lakh if you live in a metro city.

6    Personal Accident Insurance covering temporary disability including weekly compensation is a must. This is required more if you drive a two-wheeler or car. Again, it is an extremely affordable product with one crore cover available at 25 rupees per day.

7    Critical Illness Insurance pays lump-sum and/or monthly compensation in case of first diagnosis of listed critical illness. This is extremely affordable and a supplement to your Mediclaim. The Mediclaim may prove to be inadequate in case of major critical illness. Under such circumstances, this policy works like a boon.

8    Long-term goals of children’s education and own retirement planning is to be planned by investing on a monthly basis in mutual funds. Popularly known as SIP, Systematic Investment Plans are an excellent tool to achieve long-term goals.

9    Among the to-be-avoided investment is land, a second home and gold. All these are bad investments with liquidity not assured except for gold. While gold is used in marriage and other functions, it is a very bad investment. It does not offer any interest, dividend or regular income. Similarly rent offered on real estate is pathetically low in comparison to market value. It is ideal to keep maximum investment with an eye on liquidity.

10    Last but not the least, make a will. Protect all your estate and ensure that all self-acquired assets are transferred to your legal heir without any problem. Though there is no standard format of a will, it’s better to consult a lawyer. Making of a will is an extremely easy and affordable activity.

To conclude, women are the main pillars of the home. By taking active interest in managing family finances, they will play a crucial role in achieving the goal of higher education of children and total financial freedom post retirement.
 
Abhay Gadiyar is an investment consultant based in Thane

Fact File

  • Make a list of all monthly expenses using a simple Excel sheet and categorise the expenses.
  • Avoid investing in land, a second home or gold.
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